Cigarette manufacturers on Saturday requested the National Board of Revenue (NBR) to reduce the 10%-tax imposed on the export of tobacco leaves.

They said the industry is capable of contributing several thousand million takas in export basket, but has failed to accomplish it due to the export tax.

A five member delegation from Bangladesh Cigarette Manufacturers Association came up with the observation at a pre-budget meeting with NBR in its headquarter in Dhaka.

NBR member (VAT implementation and IT) Enayet Hossain chaired the meeting.

‘We have started tobacco export with 15% cash subsidy, but as time goes on, we are paying 10% tax on export. The tax should be reduced for the development of the sector,’ said Dhaka Tobacco Industries managing director Sheikh Bashir Uddin.

Such policies on the sector might turn the positive revenue growths into negative revenue growth if continues, he said.

British American Tobacco Bangladesh managing director Shehzad Munim requested NBR for the tax withdrawal saying that ‘Bangladesh cannot compete with the other international players in export market due to the export tax.’

The government in FY2010-11 imposed a 10% tax on export of tobacco leaves.

The manufacturers also demanded that the NBR should initiate preventive mechanisms against smuggling, downgrading, and counterfeit cigarettes.

BATB chairman Golam Mainuddin pointed that improper pricing has led to cigarette smuggling.

‘Cigarette brands under premium segment are currently priced $ 16 [about Tk 1245] per carton in international market while it stands at almost $ 23 [about Tk 1790] in Bangladesh. Due to the price difference of Tk 550 per carton in Bangladesh, smuggling has increased,’ he said requesting NBR for paying attention to counter smuggling in the upcoming budget to get required amount of tax from the sector.

He also requested NBR not to take any policy that would encourage people to consider tax evasion more profitable than paying tax.

Shehzad Munim asked NBR to pay attention while finalising prices of cigarettes under four segments: low, medium, high and premium.

‘Please pay attention to the matter so that the price finalization from NBR cannot be a path for opening up any window for smugglers,’ he said.

In response, NBR member Enayet Hossain assured the manufacturers that the board will take necessary measures so that the government pricing do not encourage smuggling and result in negative revenue growth from the sector.