Govt plans to raise high-end cigarette prices to curb consumption

Highlights: TBS

The government is planning to hike prices to curb the consumption of high-end and premium cigarettes, which has risen following a significant drop in lower-priced cigarette sales after the supplementary tax increase in January, Finance Adviser Salehuddin Ahmed said at a recent meeting.

The meeting was held on 25 February by the advisory committee tasked with reviewing the draft amendment of the Smoking and Tobacco Products Usage (Control) Ordinance, 2024.

"To reduce smoking prevalence among marginalised communities, higher taxes have already been imposed on lower-tier cigarettes. Steps will also be taken to curb the consumption of luxury cigarettes in the future," the finance adviser said at the meeting.

On 10 January this year, the National Board of Revenue (NBR) issued an ordinance raising duties and taxes on nearly a hundred products, including cigarettes.

At the advisory committee meeting, Mohammad Belal Hossain Chowdhury, member (VAT Implementation & IT) of the NBR, reported that due to the rise in high-end cigarette sales, revenue from the sector in February this year has increased compared to February last year.

"In the first 25 days of February 2025, revenue from this sector reached Tk3,148 crore, surpassing the total revenue of Tk3,131 crore collected in February of the previous year," he said.

According to the meeting minutes, Commerce Adviser Sheikh Bashir Uddin opposed the imposition of high taxes on cigarettes and other tobacco products.

He said that the increased tax on lower-tier cigarettes has led to smuggling. "A close inspection of cigarette shops would reveal that instead of declining, sales have actually risen by 10%. This is fostering the growth of an illegal industry."

Sheikh Bashir stated that curbing the illicit trade of tobacco products could generate an additional Tk10,000 crore in annual revenue.

At the meeting, Fisheries and Livestock Adviser Farida Akhter said considering the enactment of the law in 2005 and its amendment in 2013, government revenue has not decreased but has instead increased 12-fold over time.

The National Tobacco Control Cell reported that, accounting for inflation in 2023, the economic loss from tobacco use in Bangladesh amounted to Tk42,435 crore.

Supporting the amendment of the tobacco control law, the finance adviser said, "Before finalising the proposed amendments, it is crucial to gather opinions from anti-tobacco organisations, tobacco companies, businesses, wholesalers, and retailers on the potential impact."

However, Farida Akhter noted that as a signatory to the World Health Organisation's Framework Convention on Tobacco Control (FCTC), the Bangladesh government cannot seek opinion from tobacco companies.

At the time, the finance adviser responded, "It is necessary to consider the opinions of business groups when amending the law. A unilateral decision could have adverse effects on other sectors as well."

He instructed Farida Akhter to present information at the next meeting on why meetings with tobacco companies and vendors are deemed inappropriate, which countries have banned the sale of single cigarettes, and the impact of such measures.

On e-cigarettes

Farida Akhter noted that despite the commerce ministry's ban on e-cigarette imports, their usage is still evident. She emphasised the need to investigate whether the banned product is being produced domestically.

In response, Sheikh Bashir Uddin said the reality is that despite the ban, e-cigarettes are still available in the country, but the government is losing out on revenue.

The commerce adviser supported the idea of allowing regulated e-cigarette use in the country to protect revenue interests.

At the meeting, an NBR member reported that the US-based multinational tobacco company Philip Morris International Inc has applied for permission to manufacture e-cigarettes in Bangladesh.