{"id":1685,"date":"2023-11-22T16:39:22","date_gmt":"2023-11-22T16:39:22","guid":{"rendered":"https:\/\/blogs.bmj.com\/tc\/?p=1685"},"modified":"2023-11-22T16:39:22","modified_gmt":"2023-11-22T16:39:22","slug":"advocates-call-for-urgent-reform-of-bangladeshs-tobacco-tax-system","status":"publish","type":"post","link":"https:\/\/blogs.bmj.com\/tc\/2023\/11\/22\/advocates-call-for-urgent-reform-of-bangladeshs-tobacco-tax-system\/","title":{"rendered":"Advocates call for urgent reform of Bangladesh’s tobacco tax system"},"content":{"rendered":"

Mahir Dyan Amin, ABM Zubair, Md. Shahedul Alam, Md. Hasan Shahriar<\/strong><\/p>\n

Bangladesh is globally the 9th largest<\/a> cigarette market. Adolescent (13-15 year olds) smoking prevalence<\/a> is 9.2% and over 35% of those aged over 15 are currently smoking. Tobacco use claims<\/a> 161,000 lives a year and incapacitates hundreds of thousands of people. A 2019 study conducted by the American Cancer Society put the financial burden of tobacco use in Financial Year (FY) 2017-18 at 305.6 billion Bangladeshi Taka (BDT) much higher than the revenue generated from tobacco which was BDT 228.1 billion.\u00a0 Overall, tobacco use has emerged as a growing threat to the public health, economy, and environment of the country. For this reason, the country has a developmental vision of becoming a tobacco-free country by 2040<\/a>.<\/p>\n

Yet Bangladesh\u2019s convoluted and flawed tobacco tax structure is greatly at odds with this vision. Its tax system is ineffective in discouraging<\/a> and reducing tobacco use and at odds with Article 6 of the WHO Framework Convention on Tobacco Control (FCTC).\u00a0 Article 6 <\/a>\u00a0requires parties to adopt the simplest and most effective tobacco tax system which will contribute to reducing tobacco use, an obligation Bangladesh is yet to fulfil<\/a>, despite a\u00a0 Prime Minister\u2019s 2016 directive to simplify and strengthen the existing tax system.<\/p>\n

A close look at the existing tobacco tax structure of Bangladesh reveals several debilitating features that result in no benefits to the country, its government, or its people\u2014only to the tobacco industry.<\/p>\n

Weak and Flawed Tax Base fails to Reduce Use and Raise Revenue:<\/strong> Bangladesh considers the retail prices of tobacco products as its tax base and a supplementary duty (excise tax) is imposed as a percentage of the price. Since the retail prices of tobacco in Bangladesh remain low, the tax does little to control tobacco use or raise revenue. An analysis of WHO data<\/a> for cigarette prices in 176 countries shows that a pack of 20 sticks of the most sold cigarette brand costs (International dollar) the most in Sri Lanka, US$ 24.92 and the tax rate imposed is 72.02 %. However, despite Bangladesh\u2019s tax rate at 73% being higher than Sri Lanka , a pack of 20 cigarettes is sold for just US$ 2.91.<\/p>\n

This paradox of having low prices despite high taxation is, in fact, the result of a flawed tax system that is being exploited by tobacco companies to maximize their profits, while denying government the benefits effective tobacco taxes can provide. The budgetary decision of not raising taxes in the low tier in recent fiscal years has allowed tobacco companies to maximize their profits. Raising the base prices alone (with no change in the percentage of supplementary duty) allows companies to pocket a significant share of the increased price.<\/p>\n

A Convoluted and Flawed Tobacco Tax Structure:<\/strong> Bangladesh currently has a multi-tiered (low, medium, high, and premium) ad valorem tax structure for cigarettes. The National Board of Revenue reported that in FY 2006-07, only 25% of cigarette smokers smoked low-tier cigarettes, but this percentage jumped to 71% in FY 2017-18<\/a>. This is a result of consistently low tax in this tier which allowed companies to introduce new low-tier cigarette brands. Thus, those who may have quit due to higher prices responded by switching to low-tier brands.<\/p>\n

A Tobacco Tax Regime with Narrow Coverage and Weak Administration:<\/strong> Jarda, gul, bidi and other cheap tobacco products have largely remained out of the tax net<\/a> and are produced locally without almost any government supervision. While more than 50% of the country\u2019s total tobacco users use are also users of smokeless tobacco (SLT) products, the revenue contribution of these products remains at only 0.15 % of total tobacco revenue in FY 2020-21. As the majority of SLT users are women and those living in poverty,\u00a0 tobacco taxation has largely failed to safeguard the most vulnerable populace.<\/p>\n

The result of such convoluted tax structure is already evident. According to a 2021 WHO report<\/a>, Bangladesh ranks 107th among 167 countries where cigarettes are sold cheaply (with 167th being the cheapest). In Southeast Asia, Bangladesh sells the 2nd cheapest cigarette brands, after Myanmar.<\/p>\n

Increasing Affordability:<\/strong> PROGGA (Knowledge for Progress), a Bangladesh-based research and advocacy organisation, analysed affordability in different tiers of cigarettes using the Relative Income Price (RIP) method. In FY 2015-16, a person who smokes cigarettes had to spend 7.78, 5.39, and 3.47 % of their per capita share of gross domestic product (GDP) to buy 1000 sticks of premium, high, and medium tier cigarette brands respectively. By FY 2021-22, the numbers became considerably lower, respectively 5.82, 4.40, and 2.72%\u00a0 (i.e., consumers could purchase the same quantity of cigarettes while spending less than before). What is more concerning is the trend of increasing affordability in the lowest price tier of cigarettes as 71% of cigarette users (as of FY 2017-18) belong to this tier. In FY 2018-19, a purchaser of low-tier cigarette brands had to spend 1.96% of per capita GDP for 1000 sticks, declining to 1.68% by FY 2021-22. As a result of this decline in real prices, smoking prevalence has plateaued in recent years.<\/p>\n

Becoming cheaper than essential commodities:<\/strong> In addition to this growing affordability, cigarettes are becoming cheaper compared to essential commodities like flour, the price of which jumped by 71.7% between March 2022 and March 2023. Cigarettes have seen only a 2.56% hike, and the prices of other tobacco products such as jarda, gul and bidi have seen no changes for FY 2022-23.<\/p>\n

Way Forward<\/strong><\/p>\n

Increasing prices of tobacco products through more effective taxation is likely to be the most cost-effective measure for a country like Bangladesh as it discourages consumption\u00a0 while generating revenue for the government. Adoption of a specific excise tax system like 65 other countries have including the Philippines, Nepal, Sri Lanka, and Malaysia, is advised. Another 63 countries, including neighboring India and Thailand, have already opted<\/a> for a hybrid tax regime which means the application of both specific and ad valorem tax systems. Tobacco control organisations in Bangladesh have long been urging the government to adopt a specific tax system<\/a> for tobacco. In addition, the number of price tiers in cigarettes should be reduced from the existing four to one. Prices of tobacco products must be increased in line with inflation and increases in per capita income. The tax net of the government must be expanded, capturing particularly jarda, gul, bidi, and other unregistered factories. There is no alternative to strengthening tax administration if Bangladesh is to meet its tobacco-free goal.<\/p>\n

Mahir Dyan Amin is an independent public health policy researcher from Dhaka, Bangladesh. ABM Zubair is Executive Director of PROGGA (Knowledge for Progress) and Director of the Center for Research and Advocacy to Fight Tobacco (CRAFT) in Bangladesh.\u00a0Md. Shahedul Alam is Head of Research and Advocacy and Md. Hasan Shahriar is Head of Programs, both also at PROGGA in Bangladesh.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Mahir Dyan Amin, ABM Zubair, Md. Shahedul Alam, Md. Hasan Shahriar Bangladesh is globally the 9th largest cigarette market. Adolescent (13-15 year olds) smoking prevalence is 9.2% and over 35% of those aged over 15 are currently smoking. Tobacco use claims 161,000 lives a year and incapacitates hundreds of thousands of people. A 2019 study […]<\/p>\n

Read More…<\/a><\/p>\n","protected":false},"author":459,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1685","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"\nAdvocates call for urgent reform of Bangladesh's tobacco tax system - Blog - Tobacco Control<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/blogs.bmj.com\/tc\/2023\/11\/22\/advocates-call-for-urgent-reform-of-bangladeshs-tobacco-tax-system\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Advocates call for urgent reform of Bangladesh's tobacco tax system - Blog - Tobacco Control\" \/>\n<meta property=\"og:description\" content=\"Mahir Dyan Amin, ABM Zubair, Md. 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