Bad news for smokers

Cigarette prices are set to go up as the government yesterday proposed tax hikes aimed at reducing consumption of tobacco and maximising revenue collection from the sector.

The government proposed the floor price of Tk 19 for a low-end 10-stick cigarette pack with a supplementary duty of 48 percent, up from existing Tk 15-16.50 with a duty of 43 percent.

It means a 10-stick cigarette pack of this category will now cost around Tk 33 after adding duty and 15 percent VAT against the previous price of Tk 27 a pack.

Similarly, the floor price for two categories of middle-end cigarettes has been increased to Tk 39 and Tk 69 from Tk 35 and Tk 54. Though the supplementary duty remains unchanged at 60 percent and 61 percent in the proposed budget, their prices will increase because of a rise in base prices on which duty and VAT will be imposed.

The prices of high-end cigarettes, such as Benson & Hedges and Marlboro, will increase due to a rise in duty to 63 percent from existing 61 percent.

Earlier, a 10-stick pack with a floor price of Tk 90 or more fell in the top category, but now a 10-stick pack worth Tk 70 will come under this category. So, cigarettes of brands like Gold Leaf will get costlier due to rearrangement of the floor price.

"Considering the issues of health risk and harmful effects of tobacco products, we are committed to reducing the use of tobacco and maximising revenue collection from this sector and thus want to maintain compliance with global anti-smoking policy," AMA Muhith said in yesterday's budget speech.

For a long time, it has been a tradition on part of the government to fix the price limit of cigarettes for the sake of revenue collection though it does not go with the spirit of the market economy, he said.

"I propose to fix a minimum floor level for cigarette price and hence impose specific amount of supplementary duty and VAT on the fixed price."

Anti-tobacco campaigners have hailed the price hike of cigarettes, but they demanded further price increase.