Introduce Tk10 excise duty per cigarette, increase VAT: CPD

The Centre for Policy Dialogue (CPD) has proposed introducing an excise duty of Tk10 on each stick of cigarettes.

It also called for eliminating the tiers of cigarette taxation and replacing those with a single universal system, while presenting recommendations for the budget of the next fiscal year 2023-24 on Monday (27 March).

The specific excise duty, which is fixed per stick or per pack, could be implemented instead of an ad valorem tax.

Currently, the government charges Health Development Surcharge, supplementary duty and VAT on tobacco products.

Cigarettes are also taxed according to four tiers – Low, Medium, High and Premium.

Apart from cigarettes, the CPD has proposed a specific excise duty Tk3 on per stick of bidi and Tk6 on per gramme of Jarda and Gul, the CPD said on Monday (27 March).

It also suggested a specific excise duty on Jarda and Gul be increased by Tk1 each year to account for annual inflation and economic growth.

Besides, the think-tank proposed increasing the Health Development Surcharge from 1% to 5%.

The VAT on cigarettes and other tobacco products should be increased from 15% to 20% in FY24, the CPD suggested.

The effective tax for publicly-listed tobacco companies decreased by 1 percentage point in 2022, it said.

The CPD proposed the corporate tax on all companies manufacturing tobacco products to be increased from 45% to 50% in FY24

For soft drinks and energy drinks, the CPD has recommended a specific excise duty of Tk0.10 per ml or Tk100 per litre.

Source: The Business Standard
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