Pricing gap may cost govt Tk 40.6b in cigarette tax revenue: PPRC

The government could lose more than Tk 40.6 billion in annual cigarette tax revenue due to a mismatch between official prices and actual retail sales in the low- and medium-tier segments, according to a study by the Power and Participation Research Centre (PPRC).

The findings were unveiled at a press conference on tobacco tax and policy reforms at the National Press Club in the capital on Monday.

Presenting the study, PPRC Senior Research Associate Mohammad Ihtesham Hassan said the existing pricing structure allows cigarettes to be sold at prices higher than those used for tax calculations, creating a significant revenue gap.

Under the proposed FY2026-27 budget, the retail price of a 10-stick pack in the low-tier segment has been fixed at Tk 62. In reality, however, consumers are paying Tk 7.0 per stick, higher than the implied price of Tk 6.20.

A similar gap exists in the medium-tier segment, where smokers are paying around Tk 0.80 more per stick than the official pricing structure suggests.

"If taxes were aligned with actual market prices, the government could collect substantially higher revenue," the study said.

According to PPRC estimates, the pricing anomaly in the two segments could result in an annual revenue loss of Tk 40.62 billion.

Speaking at the event, PPRC Executive Chairman Dr Hossain Zillur Rahman said tobacco tax policies were failing to reflect market realities, causing revenue losses for the government.

"When policy becomes trapped in decimal-point calculations rather than actual retail prices, revenue opportunities are lost," he said, urging the authorities to revise the price structure before the budget is finalised.

He also criticised the government's approach to emerging nicotine products, arguing that the regulatory definition of e-cigarettes had been weakened while nicotine pouches were being accorded policy recognition despite potential public health risks.

"Any revenue gains from such products would be marginal, but the risks for young people could be substantial," he warned.

The speakers recommended raising the minimum price of low-tier cigarettes to Tk 70 per 10-stick pack from the proposed Tk 62 and increasing the medium-tier price to Tk 100 from Tk 92.

The event was also addressed by Dr Shafiun Nahin Shimul, professor and director of the Institute of Health Economics at the University of Dhaka, and Dr S. M Abdullah, associate professor of Economics at the same university.

newsmanjasi@gmail.com