Experts suggest scrapping of \\\'price slabs\\\', hiking tax rates

The government is losing substantial amount of revenue from tobacco products including cigarettes due to inappropriate price slabs and taxes on the same, experts said Saturday.
They said the government has increased the price slabs on the tobacco products significantly instead of raising the taxes particularly in the case of lower segment of cigarettes at a rational level resulting in its revenue losses.
Experts said the government has increased the price slabs ranging from 220 to 833 per cent on the tobacco products including cigarettes and bidis while the taxes have been raised within the range of 14 to 22 per cent only in last 12 years.
Experts have demanded scrapping of the price slabs and increase in taxes on cigarettes and bidis in a bid to cut their consumption.
Dr Mahfuzur Rahman, Technical Officer of the World Health Organisation (WHO), said they would submit a set of recommendations to the government for increasing the taxes and scrapping the policy of fixing the price slabs with a view to increasing the real price of the tobacco products and revenue as well.
"If the excise duties and VAT on the tobacco products are raised adjusting the country's inflation, their relative price will be increased and many people will stop the use of harmful products to protect their health," he told the FE.
Dr Sohel Reza Choudhury, a researcher on the cardiovascular diseases of the National Heart Foundation in Dhaka, told the FE that excise duty was imposed for reducing the use of the tobacco products and save life.
However, the faulty price slabs fixed by the National Board of Revenue (NBR) have failed to discourage smoking and consumption of non-smoking tobacco products resulting in increased incidence of lung cancer and cardiovascular diseases requiring billions of taka every year for treatment, the doctor said.
He demanded removal of the price slabs and imposition of higher excise duties in a bid to save life as well as boost the revenue income.
According to an estimate of the WHO, consumption of tobacco items causes death to a total of 57,000 people, makes 3,82,000 physically disabled and costs Tk 110 billion for medical treatment in Bangladesh every year.
A study titled "The Economics of Tobacco and Tobacco Taxation in Bangladesh", the government will lose Tk 30 billion worth of revenue a year due to mismatch of the price slabs and taxation on the tobacco products.
According to the study carried out by Dr Abul Barakat, if the government withdraws the price slabs and imposes 70 per cent excise duty on the price of cigarettes, bidis and other smokeless tobacco products, it could realise additional Tk 30 billion revenue annually.
Barakat said the NBR without any reason has made price slabs for the bidis and the cigarette products which ultimately narrowed the way of revenue income of the government.
Taifur Rahman, coordinator of the US-based Campaign for Tobacco Free Kids (CTFK) in Bangladesh, said as per the Framework Convention on Tobacco Control (FCTC), the government is obliged to increase taxes on the tobacco products to 70 per cent.
Currently, the NBR imposes 20 per cent to 60 per cent supplementary duty (SD) on the smoking and smokeless tobacco products.
The present tax policy on tobacco products neither helps expand the government's revenue income nor reduce the tobacco product utilisation by the people, Taifur Rahman said.
He said when the NBR increases the price slabs a portion of the additional money goes to the tobacco manufactures and the rest to the NBR.
A senior NBR official said the present price slabs were introduced by examining different issues.
Yet, the demand for removal of the price slabs will be considered, the official told the FE.