Tobacco companies in Bangladesh evaded government revenue of Tk 3,784 crore during the 2023-24 fiscal by selling cigarettes at prices higher than the maximum retail price printed on the packets, a new study revealed on Wednesday.
The Bureau of Economic Research of Dhaka University and the Bangladesh Network for Tobacco Tax Policy jointly conducted the study titled 鈥楾obacco Company Price Manipulation: Necessary Preventive Measures.鈥�
The study found that cigarette prices in the market exceeded the MRP by 8 per cent to 21 per cent during the 2023-24 fiscal.
Since government tax revenue is calculated based on the printed MRP, this price inflation benefits tobacco companies while depriving the state of significant revenue.
The study highlighted that while other consumer goods adhere to MRP regulations, cigarettes are routinely sold at inflated prices.
Retailers are often forced to buy cigarettes from company representatives at or above the MRP, leaving them with no choice but to charge higher prices from consumers. This pricing structure, dictated by tobacco companies, allows them to evade taxes legally owed to the government.
The research was based on data collected from 48 retail outlets across 12 locations, including divisional cities such as Dhaka, Khulna, Barishal, and Mymensingh, as well as district towns.
It found that single-stick cigarette sales at higher prices dominate retail transactions, depriving government from getting additional tax.
According to the study findings, premium-tier cigarettes sold at Tk聽345 per 20-stick pack instead of the printed Tk聽324, leading to Tk聽587 crore in lost revenue.
High-tier cigarettes are sold at Tk聽253 instead of Tk聽240, causing a loss of Tk聽155 crore. Mid-tier cigarettes are sold at Tk聽153 instead of Tk聽140, resulting in Tk聽632 crore in revenue loss.
Low-tier cigarettes are sold at Tk聽115 instead of Tk聽100, leading to the highest revenue loss of Tk聽2,410 crore.
Bangladesh Cancer Society Professor Golam Mohiuddin Faruq warned that selling cigarettes above MRP violates national laws and allows tobacco companies to evade taxes. He emphasised the need for stricter enforcement of pricing regulations.
Public health policy analyst advocate Syed Mahbubul Alam Tahin asked the government for banning single-stick cigarette sales to curb tax evasion.
鈥楾obacco companies always resist price hikes because they already sell at inflated rates. Regulating retail outlets through licensing and banning single-stick sales will help bring them under accountability,鈥� he suggested.
Dhaka University Professor and Convener of BNTTP Rumana Haque urged the government to impose higher tobacco taxes and shift to a specific tax model.
The webinar was inaugurated by BER project officer Ibrahim Khalil, with the main research findings presented by BER project manager Hamidul Islam Hillol and moderated by BNTTP research associate Ishrat Jahan Oishi.