Rise tobacco price to fund pandemic budget: Economists

Business Correspondent

Economists in Bangladesh have calculated that the government can fund its pandemic budget by increasing the “real prices” of tobacco products.

Tk. 11,000 crore in additional revenues could be raised from tobacco sector if the proposals of the health ministry and anti-tobacco activists were adopted. This will also reduce the number of tobacco users.

The reaction came in a post-budget virtual event hosted by PROGGA (Knowledge for Progress) and Anti-Tobacco Media Alliance (ATMA).

Bangladesh Cancer Society, BCCP, ACD, YPSA, Aid Foundation, Bangladesh Anti-Tobacco Alliance, BNTTP, BITA, Grambangla Unnayan Committee, NATAB, Prattashya, TCRC, National Heart Foundation, Dhaka Ahsania Mission, UFAT, TABINAJ, Voice, WBB Trust, ATMA and PROGGA jointly organised the event.

Convener of the National Anti-Tobacco Platform economist Dr. Qazi Kholiquzzaman Ahmad, Former Deputy Governor of Bangladesh Bank Khondkar Ibrahim Khaled, Journalist Monjurul Ahsan Bulbul, Senior Research Fellow of BIDS Dr. Naznin Ahmed and Prof of Economics Dr. Rumana Huque spoke at the discussion.

The finance minister in his budget proposal on June 11 increased cigarette prices in different tiers.

But experts showed that the ‘real price’ would be decreased, comparing with the recent increase in National Income Per Capita (Nominal).

Their proposals include:

Introducing specific taxes: Bringing the number of price slabs down to two (low and high) from the existing four by merging the 37+ and 63+ taka tiers under low tier and the minimum retail price for 10 sticks should be BDT 65. A supplementary duty of 50 percent and 10-taka specific tax should be imposed on the low-tier.

Merging the 93+ and 123+ taka tiers under premium tier and the minimum retail price for 10 sticks should be BDT 125. A supplementary duty of 50 percent and 19-taka specific tax should be imposed on the premium tier.

Elimination of price distinction between filtered and non-filtered bidis: In bidi, the price for 25 filtered sticks should be BDT 40, which will be followed by a supplementary tax of 45 percent and a 6.85-taka specific tax. For 20 filtered bidi sticks, the price should be BDT 32, followed by a supplementary tax of 45 percent and a 5.48-taka specific tax.

Increasing the price and supplementary duty of smokeless tobacco: Per 10-gram gul should be set at BDT 23 and a supplementary duty of 45 percent will be applied in both jarda and gul. A specific tax amounting BDT 5.71 and 3.45 will be imposed for jarda and gul.

Impose a 3 percent surcharge on retail prices of all tobacco products: If the above proposals are implemented, it would raise in additional revenues up to BDT 10,000 crores for the govt. Also, an additional BDT 1,000 crore would come from the 3 percent surcharge.

This will help the government in bearing medical expenses and implement the stimulus packages. This will encourage nearly 2 million current adult smokers to quit and prevent 6 lac premature deaths in the long run.

“We have been repeatedly demanding increased prices and taxes for tobacco products to safeguard people from the harms of it. Sadly, it is far from being implemented,” Qazi Kholiquzzaman said.

“The philosophy of development has become so dependent on the market economy that public health is not getting priority. However, we will keep on asking to increase the price and tax of tobacco products.”

Ibrahim Khaled said that it is not healthy for an economy to rely too much on the banking sector to fund the national budget.

“The government has a golden opportunity to generate additional revenue from internal sources,” he said, referring to increased tobacco prices.