Huge revenue evaded in tobacco sector

Staff Correspondent

21st April, 2019 08:26:30 printer

Huge revenue evaded in tobacco sector

The government is losing huge revenue from the tobacco sector in the current fiscal year as a number of cigarette manufacturers are allegedly evading taxes.

The National Board of Revenue estimated revenue collection amounting to Tk 26,000 crore (260 billion) from the sector in the 2018-19 FY but the figure may fall short of the estimate by Tk 2,000 crore, NBR sources said.

The unscrupulous cigarette manufacturers are not only depriving the government of revenue, but also violating the tobacco control law and frustrating the government’s efforts to decreasethe number of smokers.

The NRB sources said the government almost doubled the minimum prices of cigarettes three years ago to raise revenue collection and discourage smoking.

They said the minimum rate for a cigarette packet of 10 sticks was set at Tk 35 for the current fiscal year but the dishonest manufacturers have flooded the market, particularly Rajshahi, Rangpur, Chittagong, Kushtia and Sylhet regions with low-quality cigarettes selling at Tk10-15 per packet.

Sources said the manufacturers can sell cigarettes at so low prices as they do not pay the revenue; sometimes they do not use the mandatory bandroll son the packs or sometimes use fake bandrolls.

They said the manufacturers are supplying low-quality illegal cigarettes in the name of different brands, including Senor Gold, Derly, Black, and Bharasa.

Market source said illegal cigaretteshave grabbed around 50 percent of the market of lower segment cigarettes.

The minimum price ofa 10-stick packet of lower category cigarettes has been increased to Tk35 inthe 2018-19 FY from Tk27 in FY 2017-18. The price was Tk 23 and Tk 18in the two previous FYs.

The government earns revenue of Tk 24.85 from a cigarette packet of Tk 35 – 55 percent in the form of supplementary duty, 15 percent in the form of Value Added Tax (VAT) and 1 percent in the form of health surcharge.

The unscrupulous manufacturers are carrying on the illegal business under the very nose of the local administration and the law enforcement agencies.

Economists and health experts urge the revenue authorities to be more active in combating illegal cigarettes to raise revenue collection and check increase in number of smokers.

They also suggest raising the Price and tax on bidi and smokeless tobacco products like gul (powered tobacco) and jorda (chewing tobacco).