Tobacco prices 'falling, use growing'

In a startling revelation, a report says tobacco prices have been falling steadily since 2003 in Bangladesh due to 'faulty' taxation, encouraging new users. It says the real prices have, indeed, fallen as the different taxes were levied on different price slabs and were never based on inflation. Increasing real incomes have made the tobacco products affordable, the report notes and suggests specific cigarette tax of Tk 34 per 10 cigarettes, Tk 4.95 per pack of 25 bidis and ending existing price slabs. Read tobacco news and interesting articles about cigarettes.

 "It would encourage nearly 7 million cigarette and 3.4 million bidi smokers to quit and keep 10.5 million youths away from taking up the habit," Prof Abul Barkat, the lead author of 'The Economics of Tobacco and Tobacco Taxation in Bangladesh' said while revealing the report. Prof Barkat said, "If the government adopts the policy, it will earn Tk 15 billion more in tax revenue from cigarettes and Tk 7.2 billion from bidis." Thousands of lives would be saved in Bangladesh where more than 150 people are estimated to be dying every day due to tobacco-related illness. He said the most effective way to reduce tobacco use is to raise the price of tobacco through tax increase and ensuring that the tax increases are reflected in prices. "There is an inverse relationship between tobacco product prices and consumption.

Falling cigarette and bidi prices lead to increases in smoking while rising prices will reduce smoking. "A 10 percent increase in average cigarette prices in Bangladesh will lead to an over 5 percent reduction in cigarette consumption, while a 10 percent increase in average bidi prices will reduce their consumption by almost 7 percent," Prof Barkat maintained. Also the Chairman of state-owned Janata Bank, he warned that rising incomes could lead to significantly more smoking in Bangladesh 'unless steps are taken to reverse this trend'. The finds o the Bloomberg Philanthropies-funded study came out on Thursday, weeks before the 2012-13 fiscal budgets which will be presented in Parliament on June 7.

 As tobacco industries fight every year to block tobacco tax increase to keep their sales intact, anti-tobacco activists and civil society members this year raised their voice against the move. The government hiked cigarettes prices in different slabs and supplementary duties imposed on cigarettes vary from 36 percent to 60 in four tiers. It is only 20 percent in bidis. The different price tiers, anti-tobacco activists say, rather helped people to switch from costlier to cheaper ones. Prof Barkat said in the last decade, taxes were not adjusted to inflation, and worse, not to income. "That's why consumption soared," he said, adding bidi consumption has outpaced population growth. "Cigarette use rose by 40 percent between 1997 and 2010, from 50.9 billion to almost 71.4 billion cigarettes in Bangladesh. Between 1997 and 2010, bidi use rose by 80 percent, from 43 billion to over 81 billion bidis."

 As tobacco industries argue they pay Tk 73 billion in revenues, Prof Barkat said his conservative estimates found the economic costs of tobacco use was Tk 147.70 billion including healthcare and lost productivity costs. "Employment in tobacco cultivation and manufacturing constitutes only 0.5 percent of total labour force." Fearing a loss of revenue, the Ministry of Finance recently shot down plans for a tougher tobacco control law. Speaking at the report launching, Health Minister AFM Ruhal Haque hoped they would be able to pass the law after budget session, overcoming all 'hurdles'. The minister said the economic aspects of tobacco use would give 'new insights' into the fight against tobacco industries. Bangladesh ranks 20th among the tobacco-producing nations and the prices of tobacco here are said to be the cheapest in the world.