Business Desk :
With the current economic stress stemming from the impact of post-Covid and the Ukraine war, Bangladesh found itself in a dollar crisis and having to heavily rely on foreign loans. To boost the economy, the country needs to enhance its revenue generation. Experts believe strategic pricing policy in the country’s biggest source of internal revenue, the cigarette sector, can help.
Data from the NBR reveals that in the first eight months of the 2023-2024 fiscal year, revenue collection stood at Tk2,26,586 crore, leaving a daunting task of collecting over Tk1,83,000 crore in the remaining four months. The target appears ambitious, considering the current trajectory of revenue collection.
Efforts to increase cigarette prices annually have traditionally focused on top-tier cigarettes, aimed at deterring smoking and boosting revenue. However, recent research indicates that nearly 80% of smokers in the country prefer low-tier cigarettes, primarily consumed by individuals with lower incomes. Additionally, the combined market share of low and middle-tier cigarettes constitutes about 90%.
If the price of low, middle, top, and premium-tier cigarettes were raised by Tk. 10 per pack, it could potentially generate over Tk. 4,500 to Tk. 5,000 crore in additional revenue, resulting in an estimated growth of around 10-12%.
Furthermore, price increases also align well with Bangladesh’s public health policy. In addition to helping the country achieve its tobacco-free goal, the price increase can give the country’s revenue generation its much needed boost.
Professor Dr Muhammad Sahadat Hossen Siddique of the Department of Economics at Dhaka University says that new taxes should not be imposed on cigarettes. But prices of cigarettes must be increased in order to help aid the government’s fight against smoking prevalence.
