Concerns have emerged that the new cigarette price structure may lead to a decline in government revenue from the tobacco sector instead of an increase. According to analysts, although the proposed budget for the upcoming fiscal year has raised prices significantly in the higher cigarette tiers, the increase in the lowest tier has been very minimal. As a result, consumption of low-tier cigarettes is expected to rise further in the market. This shift could potentially reduce government revenue from the tobacco sector by nearly Tk 10 billion.
As a single sector, tobacco remains the largest source of revenue for the government. Around 10 percent of total government revenue comes from this sector. However, in recent years, revenue growth from this segment has slowed significantly due to increases in cigarette duties, taxes, and prices.
According to sources from the National Board of Revenue (NBR), revenue collection from this sector grew by around 14 percent in the 2022–23 fiscal year, but fell to 5 percent in the 2024–25 fiscal year. A similar downward trend is continuing in the current 2025–26 fiscal year as well.
In this context, the proposed budget for the 2026–27 fiscal year has introduced price increases across all cigarette tiers. However, the increase in prices for higher-tier cigarettes has been significantly greater compared to the lower tier. Notably, around 90 percent of cigarette consumers fall within the two lowest tiers.
Concerns have also been raised among officials of the National Board of Revenue (NBR) over a possible decline in revenue collection due to the new cigarette price structure.
Speaking on condition of anonymity, a senior NBR official said that “The revenue collection target for the next fiscal year has been set at around 20 percent higher than the revised budget of the current year, with the NBR required to collect Tk 6.04 trillion. He noted that until May of the current fiscal year, average revenue growth across all sectors stood at 11 percent. Due to various economic challenges, the NBR is already nearly Tk 100 billion behind its target. In this situation, he said, if the new cigarette price structure is implemented, it will become very difficult to achieve the ambitious revenue target for the next fiscal year.”
He added, “The uneven cigarette price structure may reduce overall national revenue. If this key revenue source is affected, it could also negatively impact the government’s ability to meet its total revenue target.”
Another NBR official said, “If the prices of the most widely consumed cigarette tier are not effectively increased, the potential for revenue growth will remain limited. This will further strengthen the dominance of low-priced cigarettes in the market, while also reducing the scope for additional revenue collection in line with targets.”
He added that, considering the overall situation, the NBR may soon send a letter to the Finance Minister requesting a reassessment of the proposed prices for lower-tier cigarettes. This, he said, could introduce new directions in the budget process.
Under the proposed budget, the minimum price of the lowest-tier cigarettes has been increased from Tk 60 to Tk 62 per 10-stick pack, reflecting a rise of just Tk 2. According to the proposal, mid-tier cigarette prices have been increased from Tk 80 to Tk 92 per 10 sticks, a rise of Tk 12, while high-tier cigarettes have gone up from Tk 140 to Tk 160, an increase of Tk 20 per 10 sticks. For premium cigarettes, the price has been raised by Tk 25 per 10 sticks, increasing from Tk 185 to Tk 210.
Stakeholders say that in national budgets, tax and price increases on tobacco products are generally designed to serve two objectives: increasing government revenue and protecting public health. However, a review of the proposed budget for the 2026–27 fiscal year shows significant inconsistencies in achieving both goals. This is because price increases for low-tier cigarettes have been very minimal, while prices for higher-tier cigarettes have been raised substantially, creating a notable imbalance in the overall structure.
Analysts say the proposed cigarette pricing structure in the upcoming fiscal year could further worsen the situation in both public health and revenue collection. Therefore, they have recommended that the proposal regarding the new cigarette price structure be reconsidered before the national budget is passed on June 30. According to them, in order to reduce tobacco consumption in a practical way, simply increasing the prices of higher-end cigarettes will not be sufficient. In this case, the most effective approach could be to gradually increase the prices of low-end cigarettes and eliminate the disparity in prices across different tiers.
