Bangladesh: Tax Hike on Tobacco Demanded

Source from:  bdnews24.com  05/13/2013

After a 'frustrating' fiscal year, anti-tobacco campaigners once again raised their demands for a hike in tobacco taxes to a certain level by lifting existing price slabs to follow a global treaty that Bangladesh has ratified long ago.

"Slap70 percent taxes on all tobacco products" is the key demand of the activists before the June budget as it is evident that 'more taxes mean more revenues but fewer consumers'.

World Health Organisation (WHO) says Bangladesh spends double, than what it earns from tobacco, in treating tobacco related diseases and recommends imposing 70 percent excise taxes in all tobacco products to push prices up.

But economists say faulty taxation has fell tobacco prices in Bangladesh 'steadily' since 2001, encouraging new users.

Economist Abul Barkat said, before the last budget, the real prices of tobacco had, indeed, fallen in Bangladesh as the different taxes were levied on different price slabs and were never based on inflation.

Increasing real incomes have made the tobacco products affordable, he observed and recommended specific cigarette tax of Tk 34 per 10 cigarettes, Tk 4.95 per pack of 25 bidis and ending existing price slabs.

"Then government will earn Tk 22.2 billion more in revenue from those products even though 10.4 million people will quit the habit," he noted in a report.

"…It will save thousands of lives in Bangladesh where more than 150 people are estimated to be dying every day due to tobacco-related illness".

"But we were frustrated in the last year budget," said economist Taifur Rahman who coordinates US-based Campaign for Tobacco Free Kids (CTFK) in Bangladesh.

The CTFK, Anti-tobacco Media Alliance and Progga Knowledge for Progress at a workshop on Saturday renewed their anti-tobacco demands for the 2013-2014 fiscal, the last year of the current government.

The 2012-13 budgets drew intense backlash as finance minister without abolishing price slabs of cigarettes made 10 percent price hike in all four slabs that economists argued only benefited tobacco manufacturers.

The budget imposed only 3 percent more supplementary duty on the cheapest brand of cigarettes and 1 percent on the other three slabs. That raised the supplementary duties to between 39 percent and 61 percent in four tiers from between 36 percent and 60 percent.

The finance minister was silent about taxing hand-rolled cheaper bidis and smokeless tobacco, despite the fact that researchers showed evidence against the argument that 'millions of workers' work in bidi factories, increasing taxes may push them to uncertainty.

Researchers found that only about 65,000 workers work in 117-bidi factories across Bangladesh, far below the industry's claim.

"Lobbyists become active before budgets and they argue with concocted information," Rahman said and that the WHO FCTC that Bangladesh ratified long before suggested member states to increase tobacco prices by imposing strong taxes in a way to deter youths from smoking.

"But in Bangladesh we have witnessed on the contrary that encourages more youths to take up the habit," he said.

WHO estimated more than 40 million people consume tobacco in various forms in Bangladesh..

The International Tobacco Survey in 2009 showed that tobacco products became more affordable in 2006 than in 1990 due to its declining real prices.

"Globally it is evident that increasing taxes at a certain level reduces consumption, but immediately pushes government's revenue," Rahman said.

"It's because people don't quit (tobacco) immediately after the tax is imposed. So revenues don't fall suddenly".

He said South Africa had been constant in increasing tobacco taxes. "Finally it went up to a level when industries were compelled to raise their products prices to survive business".

The medical journal 'The Lancet' also recommends governments check tobacco use to combat lifestyle diseases that outdo infectious ones. Enditem