Tobacco taxing process to end up favouring makers

Noted economist Abul Barkat yesterday said the proposed budget had increased tax on tobacco a little but it would eventually go in favour of multinational and local tobacco companies because of the taxing process.

“What do we get in the proposed 2015-16 budget? If I speak in our finance minister's language, though I don't want to, it is 'rubbish',” he said, adding that the proposed taxation would not reduce tobacco consumption and not increase the government's revenue.

“Our proposal was to ease taxation on cigarettes but it has been made complicated in the proposed budget. It is part of evil politics. The complicated taxation layers will help tax evasion. The government will be deprived of tax and the companies will get advantage.”

He was addressing a press conference on "post-budget reaction and recommendations on tobacco tax" at the capital's Jatiya Press Club, organised by Human Development Research Centre (HDRC), Progga, Anti Tobacco Media Alliance, and Campaign for Tobacco-Free Kids.

The professor explained that the difference between the taxation layers was reduced to Tk 1 from the last year's range of Tk 15 to Tk 36, and as a result, companies could easily switch to the lower layer, thus reduce the price of cigarettes and avoid higher tax.

For example, if 10 cigarettes of a certain brand cost Tk 20, the company will have to pay 76 percent tax. But when the company, changing the brand name, sells the same 10 cigarettes for Tk 19, then it will have to pay 64 percent tax because the difference between two layers in the proposed budget is only Tk 1.

The difference between these layers in the past budget was Tk 16.

The Dhaka University professor proposed that the number of the layers should be reduced to three from four, and the government should fix the taxation layers at Tk 40, Tk 60, and Tk 100 -- which are the prices of every 10 cigarettes.