Staff Reporter:

A groundbreaking study has revealed that cigarette companies in Bangladesh are evading an estimated Tk 3,784 crores in revenue by selling cigarettes at prices higher than the Maximum Retail Price (MRP) printed on the packaging. The findings were disclosed on Wednesday during a webinar titled “Unmasking Tobacco Industry Tactics: Strategies to Prevent Price Manipulation.”

The study, jointly conducted by the Bureau of Economic Research (BER) at the University of Dhaka and the Bangladesh Network for Tobacco Tax Policy (BNTTP), found that while MRP is strictly adhered to for most products in Bangladesh, cigarette companies have bypassed this regulation. In the fiscal year 2023-24, cigarettes were sold at prices 8 to 21 percent higher than their printed MRP. As a result, the government has been deprived of significant tax revenue that could have been collected if the actual market prices were declared on cigarette packs, said a press release.

Retailers reportedly purchase cigarettes from company representatives at or above the MRP and subsequently sell them to consumers at even higher prices. This practice, dictated by tobacco companies, allows them to pocket the excess earnings without contributing the corresponding tax revenue to the government.

The study reveals key findings indicating significant price discrepancies in the tobacco market. A 20-pack of premium cigarettes, priced at Tk 324, was sold at an average price of Tk 345. High-tier cigarettes were sold at Tk 253, surpassing the marked price of Tk 240, while medium-tier cigarettes were sold at Tk 153 instead of Tk 140, and low-tier cigarettes at Tk 115 instead of Tk 100. These price manipulations have led to an estimated revenue loss for the government, amounting to Tk 587 crores from premium cigarettes, Tk 155 crores from high-tier cigarettes, Tk 632 crores from medium-tier cigarettes, and Tk 2,410 crores from low-tier cigarettes.

The research, conducted across 48 retail outlets in 12 locations spanning divisional cities and district towns, confirmed that cigarette sales at inflated prices occur in every surveyed retail outlet.

During the webinar, Professor Dr. Golam Mohiuddin Faruque, President of the Bangladesh Cancer Society, emphasized that selling cigarettes above the Maximum Retail Price (MRP) is illegal and urged the government to take strong action against tobacco companies that violate regulations and deprive the country of vital revenue.

Advocate Syed Mahbubul Alam Tahin, Member of BNTTP’s Technical Committee advocated for a ban on the sale of individual cigarette sticks to curb tax evasion. He also suggested implementing a licensing system for sales outlets to ensure accountability, drawing parallels with the government's efforts to regulate the open sale of edible oils.

Dr. Rumana Haque, Professor of Department of Economics of University of Dhaka and Convenor of BNTTP, highlighted the need for a robust national tobacco tax policy, including the introduction of specific taxation, to enhance government revenue and protect public health.

THE RESEARCH REPORT OUTLINED SEVERAL URGENT RECOMMENDATIONS:

• Strengthening enforcement of MRP regulations through enhanced monitoring by the Department of Consumer Rights Protection and the National Board of Revenue.
• Introducing a specific tax system to prevent revenue leakage.
• Implementing a digital monitoring system for tobacco sales and tax collection.
• Developing a comprehensive tobacco tax policy to promote a tobacco-free

Bangladesh.

The webinar included a keynote presentation by BNTTP Project Manager Hamidul Islam Hillol, with BNTTP Project Officer Ibrahim Khalil delivering the welcome speech. The session was moderated by BNTTP Research Associate Ishrat Zahan Aishi. Over fifty public health experts, policymakers, and tobacco control advocates participated in the event.