Price hike of low-tier cigarettes must to save poor, says experts

With 72% of the country's smokers being low-tier cigarette consumers, experts suggest raising prices of low-tier ones to save the marginal people.

A 10% price raise tends to lower smoking by 9% among low-income groups, finds a recent study by the Ark Foundation in Bangladesh and Illinois University in Chicago, United States.

The low-tier cigarette currently holds 75% of the market share while 10% is dominated by mid-tier and 15% by high-tier cigarettes. 

Given its market dominance, it may benefit the government's revenue collection and improve public health if prices of low-tier cigarettes are raised in the upcoming 2022-23 national budget, opined experts. 

Revenue growth in the cigarette sector had been 10-15% typically year to year, but it has declined in the past three years. 

Revenue earned in the FY2020-21 from the cigarette sector was nearly Tk28,500 crore, which in FY2021-22 is set to reach Tk29,700 crores, a growth of only 4%.

Kamarullah Bin Tarik Islam, Associate Professor of Economic Dept at Rajshahi University said, `To reduce smoking addiction and health risk of smokers, we don't have any other choice than raising the price of the low-segment. If this happens, we can control the big number of smokers in Bangladesh.'   

Experts say the reason for the loss of revenue is not raising the price of the low-tier cigarettes. 

Prices for low-tier cigarettes increased only Tk2 in the last three years, going from Tk37 in FY2019-20 to Tk39 in FY2021-22, costing a huge amount of revenue to the government. 

Experts think that if the growth remains stagnated then it will have a big impact on the internal revenue.