Budget Reaction 2020-21
Staff Correspondent: A tune of Tk 11,000 crore in additional revenues can be raised from tobacco sector and the use of such products can be reduced if the proposed tax and price measures from the Ministry of Health and Family Welfare (MoHFW) and anti-tobacco activists were adopted.
Such revenues can become a source of funds for the government lump-sum allotment and stimulus package, a press release said.
Economists, journalists and anti-tobacco activists vented their frustration since the proposed budget for 2020-21 ignored such proposals and missed out on opportunities. During a Budget Reaction Event, hosted online jointly by PROGGA (Knowledge for Progress) and Anti-Tobacco Media Alliance (ATMA) on 22 June 2020, in comparison with the recent increase in National Income Per Capita (Nominal), the negligible increase in cigarettes would result in reduction in the real price of cigarettes and increase in its use. Anti-tobacco organizations (Bangladesh Cancer Society, BCCP, ACD, YPSA, Aid Foundation, Bangladesh Anti-Tobacco Alliance, BNTTP, BITA, Grambangla Unnayan Committee, NATAB, Prattashya, TCRC, National Heart Foundation, Dhaka Ahsania Mission, UFAT, TABINAJ, Voice, WBB Trust, Anti-Tobacco Media Alliance ATMA and PROGGA) jointly organized the event. Nadira Kiron, News Editor of ATN Bangla, hosted the event.
On the other hand, tobacco companies would profit tremendously since the supplementary duties on cigarettes have remained almost unchanged for the fourth consecutive years. The multi-tier pricing of cigarettes has been kept untouched, thus continuing to provide the consumers with the opportunity to switch to cheaper tiers/brands and the companies with opportunities to evade taxes. This microscopic increase in prices of bidis and gul will have no impact on reducing the use of these products among the poor. The supplementary duty has also been kept unchanged for fourth consecutive years, making the bidi business even more profitable. Introducing a portion of supplementary duty as specific taxes and imposing a 3 percent surcharge on all tobacco products, proposals that could bring large sums to the govt. exchequer as additional revenues, have been completely ignored in the proposed budget. While the World Health Organization (WHO) and public health experts have repeatedly warned that the use of tobacco products increases the spread of coronavirus infection and also the risk of serious illness and discouraged the use of tobacco products during COVID-19 pandemic, the proposed budget does not reflect any of those warnings. As a result of such sheer indifference, the 37.8 million adults who use tobacco and the 41 million people who fall victim to secondhand smoke will remain in grave health risk.
Eminent economist and the convener of the National Anti-Tobacco Platform, Dr. Qazi Kholiquzzaman Ahmad, said that we have been repeatedly demanding increased prices and taxes for tobacco products to safeguard people from the harms of it. Sadly, it is far from being implemented. The philosophy of development has become so dependent on the market economy that public health is not getting priority. However, we will keep on asking to increase the price and tax of tobacco products. Former Deputy Governor of Bangladesh Bank Khondkar Ibrahim Khaled said that, it is not healthy for an economy to rely too much on the banking sector to fund the national budget. The government has a golden opportunity to generate additional revenue from internal sources. As we have seen here today, it is possible to generate as much as Tk. 11,000 crore from proper time-fitting taxation on tobacco products, which can be a tremendous source for funding the national budget.
The highest extent of hike in cigarette prices in the proposed budget is 5.4 percent which is very negligible considering the fact that during the same time the National Income Per Capita (Nominal) has increased by 11.60 percent. So, the real prices of cigarettes have actually dropped. The supplementary duty on these products also has kept the same at 30 percent which is detrimental to public health. This could easily increase the profit of bidi companies by 28.5 percent in a year. Also, the increase of per stick bidi price is a negligible 16 paisa which would only increase the threat against the health and well-being of the poor of the country. For smokeless tobacco (SLT) products, the price per 10 grams of jarda has been increased by Tk. 10, setting the price at Tk. 40, which is satisfactory but not sufficient. In gul, the increase is only Tk. 5, leaving the price at Tk 20 per 10 grams. As a result, the use of such products among women and the poor will not see any major decrease. The supplementary duty has been increased to 55 percent from 50 percent in both jarda and gul. The moves taken by the govt. in SLT products where both prices and taxes are increased can hike the govt. revenue from these products by 43 percent. It should be noted that while SLT users constitute 50 percent of total tobacco users, the reality is that revenue generated from SLT sector accounts for less than 1 percent of total tobacco revenue. So, there is still abundant opportunity to generate additional revenue for the govt. from this sector.
If the aforementioned proposals are implemented, it would raise in additional revenues up to BDT 10,000 crores for the govt. Also, an additional BDT 1,000 crore would come from the 3 percent surcharge. The additional revenues generated may help the govt. to recover losses caused by the coronavirus pandemic, bear coronavirus related medical expenses and implement the stimulus packages. At the same time, it would encourage nearly 2 million current adult smokers to quit and prevent 6 lac premature deaths in the long run. Moreover, any future spread of viruses similar to coronavirus can be easily contained.