NBR prepares draft of natl tobacco tax policy

 

The National Board of Revenue (NBR) has prepared a draft of the national tobacco tax policy with a provision for a time-bound action plan.

The plan aims at keeping a tight rein on tobacco consumption.

The draft tax policy has focused on withdrawal of tier system, gradual reduction of tobacco consumption and shift from dependency on tobacco for internal revenue collection, according to the officials.

The draft policy has also featured some vital strategies to check illicit trade of tobacco items, use health development surcharge and ban sales of bidi or loose cigarettes.

The tax officials of Tobacco Tax Cell (TTC) in a meeting last week submitted the draft policy to the country's policymakers seeking their opinions about the policy.

As a signatory to WHO Framework Convention on Tobacco Control (FCTC), the government is committed to formulating a tobacco tax policy.

Finance Minister AMA Muhith, Commerce Minister Tofail Ahmed and secretaries of finance division, internal resources division (IRD), ministries of food and agriculture were also present in the meeting.

Officials said the policymakers and bureaucrats were given some guidelines on how to tax tobacco coming out from the traditional way of taxation.

In a recent meeting of the consultative committee for the budget of the upcoming fiscal year (FY), the finance minister also hinted at the change of tax measures for cigarettes in line with practices of other countries.

He vowed not to be involved in the micromanagement concerning the price slabs of cigarettes and said the market should fix its own prices.

Tax officials said the NBR also prepared a situation paper on state of affairs with the tobacco sector in the country.

Tax on cigarettes is being imposed on an ad-hoc basis due to lack of a national policy, they said.

The policymakers discussed the ways of taxing the tobacco items as followed by other countries. It has been found that the majority of the countries have mixed type of tax-system on cigarettes.

Fifty-four countries apply specific tax, 37 ad valorem and 57 follow a mix-system while 19 others have no excise duties on cigarettes, according to an analysis of TTC.

Saber Hossain Chowdhury MP, also President of Inter-Parliamentary Union (IPU), has suggested withdrawing price slabs for tobacco in the budget for the upcoming FY.

"The government is not getting revenue of the inflated prices of tobacco. So, excise duty can be imposed on health hazardous items at fixed rate," he said.

Dr Mahfuzul Huq, technical officer of the WHO, said currently there are four-tier tobacco prices that could be brought down to two.

He said low-segment cigarettes are enjoying lower tax while consumption is higher at that level.

There is a large gap in price level of premium brand and low-brand cigarettes that should be brought down in phases within two to three years, he said.

Source: The financial express,May 23