Photo: Courtesy
Bidi is an ancient labor intensive industry. Due to unfair tax laws, Bangladesh's traditional bidi industry is presently dealing with serious difficulties. Millions of workers including the helpless, disadvantaged, extremely poor, physically handicapped and widows make a living by working in the bidi sector.
However, it is now facing many challenges rather than being supported as a domestic cottage sector. Excessive tariffs and extra income taxes have been placed on the bidi business as per instigation of several multinational tobacco companies and corrupted officials from the previous government.
As a result, legal bidi manufacturers who pay taxes are being forced to shut down their factories. Nevertheless, a 10% advance tax is required for bidi while a 3% tax is required for cigarettes. The collapse of the bidi industry is being caused by the tax discrimination between cigarettes and bidis.
Under Section 129 of the Income Tax Act, 2023, the tax rate on bidis is 10%, whereas under Section 152, the tax rate on cigarettes is 3%. Furthermore, bidi taxes under Section 129 are considered minimum tax as per Section 163, but the same does not apply to cigarettes under Section 152.
Section 129 of the Income Tax Act states that when selling banderols to bidi manufacturers who produce without mechanical assistance using traditional or household methods, the authorized seller must collect a tax at a rate of 10% of the total banderol value during the sale.
On the other hand, Section 152 specifies that cigarette manufacturers must pay an advance tax of 3% of their monthly sales. Also the advance tax paid under subsection (1) is adjustable against quarterly installments of tax payable under Section 155.
The President of the Bangladesh Bidi Malik Shomity, Mr. Bijoy Krishna De said, ‘The 10% income tax on bidis is non-adjustable, whereas the 3% tax on cigarettes is adjustable. Bidi income tax is considered ‘minimum tax’, but the same does not apply to cigarettes. To ensure fairness, the advance income tax on bidis should also be set to 3%, and Sections 129 and 163 of the Income Tax Act, 2023, should be amended. The lower tax rate on cigarettes has not negatively affected revenue collection. Implementing a uniform tax rate for bidis would curb counterfeit production and increase government revenue.’
He further added that after the anti-discrimination movement by students, the disparity in advance income tax between bidis and cigarettes still exists. Removing this disparity would strengthen employment opportunities for rural populations.
President of Bangladesh Bidi Sramik Federation Amin Uddin said, ‘Bidi is made by the poor and also smoked by the poor. Poor people get to work here. While cigarettes are made in factories using machinery and preserved by the rich ones. However, the advance tax system of bidi and cigarette is discriminatory.’
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