Kamruzzaman Bablu :
Twenty-six illegal cigarette factories, across the country from Cox’s Bazar to Rangpur, are producing more than 50 brands of illegal cigarettes by evading tax. Moreover, the produced cigarettes are being marketed using counterfeit and re-used tax stamps and band-rolls to evade taxation.
According to the National Board of Revenue (NBR), the cigarette industry is evading tax of eight to 10 percent produced cigarettes. As a result, the government loses around Tk 2,000 crore revenue every year due to the tax evasion, sources said.
The government has fixed Tk39 as the minimum price for a 10-stick pack of cigarettes. These illegal and substandard cigarettes are sold for only TK20-25 per pack as they evade the tax.
Consequently, the low-income group smokers are fond of these cheap cigarettes. In contrary, the government is losing revenue.
Economists say that the government is losing about Tk 2,000 crore revenue every year. And this is about 10 percent of the gross revenue collected from the tobacco sector.
In Bangladesh, there are three types of illegal cigarettes available in the markets. They are locally produced cigarettes by evading tax; illegal cigarettes imported from abroad by tax evasion; and manufacturing clone cigarettes of popular brands.
According to a World Bank report, some 92 percent of the illegal cigarettes are manufactured locally by skipping tax.
Budget analysis of the past few years show that the government has hiked the price of cigarettes in order to reduce the number of smokers. The government earns about 81 percent from the top-tier cigarettes, and 71 percent from the low-tier cigarettes. Moreover, alongside the high tax rate, the price of low-tier cigarettes has almost doubled in the last five financial years.
In 2015 – 16 financial year, a pack of 10-stick low tier cigarette cost Tk18, while the price was Tk39 in 2020-21 financial year. Currently, the government gets Tk28.47 as tax from a packet of low-tier cigarette that costs TK39.
Surprisingly, the same packet of cigarettes is available at Tk20-25 as those manufacturers are evading tax. The average per stick price of such cigarettes cost between Tk two and Tk2.5 across the country. Hence, the low-income group people prefer that tax evaded cigarettes.
According to studies by the anti-tobacco organizations, such tax evaded cigarettes are inspiring the rural people to choose such cigarettes.
A long-term investigation by this reporter shows that the 26 illegal cigarette factories produce over 50 brands of cigarettes by evading tax in different parts of the country. These tax evading cigarettes are distributed illegally (excluding VAT invoices) from one part of the country to the other. The cigarette packets bear fake or reused band-roll and tax stamps.
Further, the cigarette manufacturing factories do not follow the rules at minimum level. To start production of cigarettes, a factory needs at least 19 clearances and licenses including environmental clearances.
But the tax evading companies discreetly produce cigarettes from various sensitive places without the legal documents. The law enforcement agencies have unearthed such illegal factories at different times from rice mills, oil mills and even closed cinema halls and recovered huge fake band-rolls and tax stamps.
International Tobacco, an illegal tobacco manufacturing company, in the Kalurghat industrial area of Chattogram was producing and marketing cigarettes of various brands for long 15 years. They were producing cigarettes without any valid document or license from the relevant government agencies, including environmental clearances.
A Rapid Action Battalion (RAB) team on August 7 in 2019 arrested Abdul Aziz, a dealer of the International Tobacco in Patia with cigarettes worth Tk12.54 lakh.
On September 4 of the same year, the Department of Environment fined the factory Tk 70 lakh and ordered to shut it down as the company was operating without any environmental clearance for the past 14 years.
However, International Tobacco continued production illegally defying the production ban. On 11 November in 2020, the Department of Environment in Chattogram conducted another raid in the company and sealed off the factory and disconnected the power and gas connection. Moreover, a fine of Tk2,50,000 was imposed, as well.
Tax evasion goes on in guise of rice mill, oil mill and cinema hall.
It was known as a rice mill to the local people in Tangail. But that was the hub of illegal cigarette production. A team of the Customs Excise and VAT Commissionerate unearthed the factory in April of 2019 at Kalihati in Tangail.
A Karim Tobacco from Kushtia used to produce fake cigarettes of large and popular brands. The Dhaka West Customs office closed that factory in Tangail.
For a long time, in Kuliarchar of Kishoregamj district, an almond oil was producing illegal cigarettes. Exploiting the privacy of the area, Heritage Tobacco – an illegal cigarette manufacturer, secretly produced cigarettes and distributed them in the country markets.
The issue was exposed in December 2019 after the RAB recovered a large amount of illegal cigarettes and fake band-rolls. Although the production stopped for a while after the RAB drive, it continued production again.
On April 27 in last year, a RAB team led by Kuliarchar Upazila Nirbahi Officer Rubaiyat Ferdousi raided the factory again and closed it. Five people were penalized as well in this incident. After a while, Heritage Tobacco started producing illegal cigarettes again.
The investigation found that the company was producing cigarette in a protected area without ETP. The production continued next to the Begum Nurunnahar Pilot Girls High School compound in Kuliarchar.
RAB raided the Sathi Cinema Hall in Shibganj of Bogura on April 12 and busted SM Tobacco – an illegal cigarette factory. During the raid, RAB seized 240,000 illegal cigarettes and 7,000 fake band-rolls. Customs officials were present during the drive. At that time, RAB also arrested six of the workers of the factory. The Bogura Customs Excise and VAT officials said that all the activities of this company were illegal.
“They secretly conducted these illegal activities. And there are allegations that these tax evading cigarettes reach different districts of the country through courier services,” they added.
Alongside stated factories, there are more that produce illegal cigarettes. The factories are: Heritage Tobacco and Tara International Tobacco in Kishoreganj, Meghna Tobacco, Titas Tobacco, Premium Tobacco, and Black Tobacco in Narsingdi, International Tobacco at Kalurghat in Chattogram, Bijoy International Tobacco in Cox’s Bazar, Independent Tobacco in Noakhali, Vargo Tobacco in Gazipur, Beauty Tobacco in Manikganj, FT Tobacco Industries in Faridpur, South Bangla Tobacco in Bagerhat, Nasir Tobacco, Vargon Tobacco and ALM Tobacco in Kushtia, Monmohon Tobacco and Samir Tobacco in Natore, AB Tobacco, Alvi Tobacco, Jamuna Tobacco, SM Tobacco, One Cigarette Factory and ABTC Tobacco in Bogura, SV Tobacco in Rangpur and A Haque Tobacco in Kurigram.
The companies are producing cigaretets like Senorgold, Vorosa, Partner, Darly, Supergold, Tiptop, Freshgold, Tiger, Black, Zira Black, Mayor, Doury, Target, Sahara, Black White, Golden Hill, Purbani, Monomohon, Beauty King, Sholar, Maxo, City, Sultan, Top Ten, Nasir Gold, Asia, Discover, MG, Jing Jing, among others. The manufactured cigarettes are distributed across the country through courier and private transportation services.
Multiple sources said that eight to 10 percent produced cigarettes of the total cigarette industry is evading tax. According to the National Board of Revenue, the government lost around Tk 2,000 crore in revenue every year due to the tax evasion.
And if such situation goes on, this distinctive revenue generating sector will see a downfall. The government will lose revenue and public health will be threatened, too.
