More pennies per puff: Tobacco prices to rise

The tax on tobacco is set to rise once again according to the national budget for fiscal 2024-25 presented by Finance Minister Abul Hassan Mahmood today (6 June). 

The government has proposed increasing the tax rate to 66% tax on all types of cigarettes and tobacco in the next budget.   

For cigarettes, there are four tiers based on pricing: lower, medium, high, and premium. Currently, the prices are Tk45, Tk67, Tk113, and Tk150 respectively for a pack of 10 sticks. 

The supplementary duty ranges from 58% to 65% across these four tiers.

Retail prices are set to increase by Tk5 or more for each tier. 

Besides, duty is proposed to be raised by 1% to 2% in certain stages.

With the government's eye firmly on revenue generation at a time of belt tightening, tobacco, which constitutes about 13% of the annual government revenue, is set to play a key role in meeting targets. 

The Bangladesh Economic Association (BEA) believes a 66% tax would reduce smoking by about 66%, alongside generating revenue of Tk1,700 crore for state coffers.

About 70 lakh smokers will quit smoking, and about 71 lakh young people will stop habituating to smoking. Also, the additional tax revenue of the government will be earned at least Tk1700 crores

Recent data states that around 3.78 crore people, accounting for 35.3% of the population, are tobacco users in the country. Moreover, about 15 lakh individuals are suffering from tobacco-related illnesses and the government's expenditure on treating tobacco-related diseases is much higher than the revenue generated from the tobacco industry.

According to the National Heart Foundation of Bangladesh and Platform Doctors Foundation, tobacco-related diseases claim the lives of around 161,000 people annually, resulting in substantial economic losses. 

In the fiscal year 2017-18 alone, tobacco usage incurred Tk30,560 crore in economic losses, while revenue from the sector amounted to Tk22,810 crore.