Industry opposes tax on tobacco export
Thursday, 17 June 2010
FE Report
The proposed 10 per cent tax on tobacco export is likely to affect seriously the industry and the earning of foreign exchange as well.
Tobacco industry insiders said, no country in the world has imposed duty on tobacco export.
Noted economist Wahiduddin Mahmud in his budget reactions already said the economic rationale of proposing a tax on the export of tobacco is unclear.
"Every country has its own policy for taxing tobacco products to discourage consumption. This is not a matter of trade policy," Mr Wahiduddin added.
When contacted, the president of Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Annisul Huq said, the proposed budgetary step would affect the competitiveness of Bangladesh's export basket.
"Ten percent tax is a lot of money…and I don't see any necessity to impose duty which can affect the country's export," the apex trade body chief commented.
Tobacco producing companies and farmers termed the proposed budgetary measure detrimental to the overall economy of the country as the demand for the Bangladesh tobacco sharply increased in the international market in recent years.
Bangladesh is expected to earn an estimated $ 90 million in 2010 calendar year through exporting tobacco. But the income from this head is likely to fall sharply in 2011, if the government finally decides to levy tax on tobacco export.
Bangladesh fetched $ 55.2 million in 2009 and $ 35.2 million in 2008 through exporting tobacco.
"When Bangladesh is looking for export diversification, the proposed export duty on tobacco leaf will definitely be considered as regressive. It will also negatively impact the livelihood of thousands of farmers," said Zakir Ibne Hai, head of corporate and regulatory affairs of BAT Bangladesh.
When contacted, a top source of Akij Group said they also felt threatened due to the latest budgetary measure.
"We are obviously concerned…but we have to comply with the government policy," the Akij Group source added.
Germany, Belgium, Hungary, Sweden, Indonesia, Malaysia, Pakistan and Singapore are the main importers of Bangladesh tobacco leaf mostly produced by British American Tobacco, Dhaka Tobacco (Akij Group), Abul Khair Tobacco, Nasir Tobacco and Global Tobacco.
A Belgium-based tobacco buyer said : The proposed export tax on tobacco from Bangladesh sounds ridiculous. One of the reasons of buying Bangladesh tobacco is the price and by imposing an export tax, this advantage will be curtailed to a great extent. Our company might be forced to look for other sources of tobacco procurement.
Industry insiders said when the government of India promotes tobacco crop in the international market, the Bangladesh government took a reverse stand.
India holds the second position in global tobacco trade accounting for 17.7 per cent and it exports around half of its tobacco production.
Brazil and China are the first and third market leaders in the race grabbing 26.5 per cent and 16.3 per cent respectively of the total global tobacco market.
Tobacco is the core agro crop in Rangpur, Kushtia, Meherpur, Jhenidah, Chuadanga, Chittagong and Manikgonj areas.
As many as 0.3 million farmers are involved in tobacco business only in Rangpur area.
The annual sales turnover of tobacco is Tk 4.00 billion in Kushtia region and Tk 500 million in Lalmonirhat, Rangpur, Kurigram and Dinajpur.
From mid-March to Mid-May, tobacco farmers across the country transact a total of Tk two billion every year in Kushtia, the tobacco hub of the country.
The proposed 10 per cent tax on tobacco export is likely to affect seriously the industry and the earning of foreign exchange as well.
Tobacco industry insiders said, no country in the world has imposed duty on tobacco export.
Noted economist Wahiduddin Mahmud in his budget reactions already said the economic rationale of proposing a tax on the export of tobacco is unclear.
"Every country has its own policy for taxing tobacco products to discourage consumption. This is not a matter of trade policy," Mr Wahiduddin added.
When contacted, the president of Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Annisul Huq said, the proposed budgetary step would affect the competitiveness of Bangladesh's export basket.
"Ten percent tax is a lot of money…and I don't see any necessity to impose duty which can affect the country's export," the apex trade body chief commented.
Tobacco producing companies and farmers termed the proposed budgetary measure detrimental to the overall economy of the country as the demand for the Bangladesh tobacco sharply increased in the international market in recent years.
Bangladesh is expected to earn an estimated $ 90 million in 2010 calendar year through exporting tobacco. But the income from this head is likely to fall sharply in 2011, if the government finally decides to levy tax on tobacco export.
Bangladesh fetched $ 55.2 million in 2009 and $ 35.2 million in 2008 through exporting tobacco.
"When Bangladesh is looking for export diversification, the proposed export duty on tobacco leaf will definitely be considered as regressive. It will also negatively impact the livelihood of thousands of farmers," said Zakir Ibne Hai, head of corporate and regulatory affairs of BAT Bangladesh.
When contacted, a top source of Akij Group said they also felt threatened due to the latest budgetary measure.
"We are obviously concerned…but we have to comply with the government policy," the Akij Group source added.
Germany, Belgium, Hungary, Sweden, Indonesia, Malaysia, Pakistan and Singapore are the main importers of Bangladesh tobacco leaf mostly produced by British American Tobacco, Dhaka Tobacco (Akij Group), Abul Khair Tobacco, Nasir Tobacco and Global Tobacco.
A Belgium-based tobacco buyer said : The proposed export tax on tobacco from Bangladesh sounds ridiculous. One of the reasons of buying Bangladesh tobacco is the price and by imposing an export tax, this advantage will be curtailed to a great extent. Our company might be forced to look for other sources of tobacco procurement.
Industry insiders said when the government of India promotes tobacco crop in the international market, the Bangladesh government took a reverse stand.
India holds the second position in global tobacco trade accounting for 17.7 per cent and it exports around half of its tobacco production.
Brazil and China are the first and third market leaders in the race grabbing 26.5 per cent and 16.3 per cent respectively of the total global tobacco market.
Tobacco is the core agro crop in Rangpur, Kushtia, Meherpur, Jhenidah, Chuadanga, Chittagong and Manikgonj areas.
As many as 0.3 million farmers are involved in tobacco business only in Rangpur area.
The annual sales turnover of tobacco is Tk 4.00 billion in Kushtia region and Tk 500 million in Lalmonirhat, Rangpur, Kurigram and Dinajpur.
From mid-March to Mid-May, tobacco farmers across the country transact a total of Tk two billion every year in Kushtia, the tobacco hub of the country.