Tobacco prices: To hike or not to hike?

Before every financial year, there is an obvious discussion about hiking the price of tobacco products and imposing specific taxes. This year is no different. 

On 16 February, in a pre-budget meeting, Anti Tobacco Media Alliance (ATMA) asked the government to hike the price of tobacco products and impose higher taxes. However, the NBR chairman, also present at the meeting, said that simply hiking tax rates and prices will not help reduce tobacco consumption and safeguard public health.

ATMA stated that if their demands are implemented, the government will earn an additional revenue of Tk9,200 crore. At the same time, premature death of 4,45,000 adults and 4,48,000 young people will be prevented.

For the past decades, as well as incremental tax increases, there have been other initiatives taken by the government to curb tobacco consumption like awareness programmes and banning of all forms of advertisements for tobacco-related products. 

For the past few years, anti-tobacco organisations across the country have been calling for increased tobacco prices and the NBR has been complying with the demands by imposing incremental taxes on related products on a regular basis.

According to ATMA, tobacco use has remained relatively similar in recent years. Cigarettes, vapes, bidis, and other smokeless tobacco products are readily available in every corner of Bangladesh.

Shafiqul Islam, Head of Programmes of Vital Strategies, a leading INGO working towards building awareness against tobacco consumption, said, "The NBR chairman said that if the price increases, both the tobacco industry and the tax authorities are happy. The main problem here is that the price is being increased gradually. As a result, people are adapting to these small price increases. This has a limited effect on consumption. The price of low-tier cigarettes will have to be increased a lot at a time."

He added that the prices are very high in the countries that have been able to control the use of tobacco. 

Even the cheapest cigarette brand in neighbouring India is more than twice as expensive compared to that of Bangladesh. 

Between 2016 to 2018, Columbia hiked cigarette prices threefold, and consumption dropped 34%.

However, raising prices is not the only way to reduce the use of tobacco. 

"Easy access is a big issue in Bangladesh. Cigarette shops are everywhere where you can buy a single cigarette. Selling a single cigarette is strictly illegal in most developed countries," said Shafiqul Islam.

Only last December, New Zealand, in a sweeping clampdown on smoking cigarettes, declared that anyone born after 2008 cannot buy any tobacco products ever. By banning the sale of tobacco to its future generations, the country bids to phase out smoking altogether.

In Australia, the smoking rate of adults has almost halved since 1995. The country was successful in curbing tobacco consumption through a three-pronged approach of denormalising (e.g. through price increases, bans on sales to minors and restrictions on areas where smoking is permitted), education (e.g. at school and through mass media campaigns), and disruption to de-glamourise smoking (such as through the use of graphic warning labels and tobacco advertising bans).

Bangladesh aims to be a tobacco-free country by 2040, a goal set out in 2016 by the government of Bangladesh. Six years down the line, the question of how much the situation at the ground level has really changed, remains.

The purchasing power of the Bangladeshis has risen significantly. In that case, a small increase in the price of cigarettes does not amount to much. 

On the other hand, the tobacco industry contributes a lot to the economy. British American Tobacco (BAT) is the highest corporate taxpayer in the country. In fiscal year 2020-21, BAT Bangladesh deposited around Tk25,000 crore to the National Exchequer as Value Added Tax (VAT) and Supplementary Duty (SD).

Thanks to the contribution, the tobacco industry has a say when it comes to formulating policies. The tobacco industry interferes in national policymaking. Even during the Covid-19 lockdowns, they have lobbied to get permission for continued production and distribution.

 "The tobacco companies pay a huge amount of tax. This sector contributes more than many other sectors. This is true. And that's why we have to find alternatives," added Shafiqul, who is also a former additional secretary to the government.

Some experts argue that if the tobacco industry is affected, the government will lose a lot of revenue. However, Shafiqul Islam thinks that this sort of argument is in line with an economic perspective – where public health concerns are largly ignored.

Mortuza Haider Liton, the convener of ATMA, also agreed on the effect of price hike.

Hiking prices alone is not enough to curb tobacco consumption. But it is the most effective method. It is universally proven that an increase in price reduces consumption. Especially, when the price of tobacco is high, young people are discouraged from consuming tobacco, and tobacco addicts, especially the poor, are encouraged to quit

Mortuza Haider Liton, convener of Anti Tobacco Media Alliance

According to the Global Adult Tobacco Survey (GATS) study report of 2017, 35% of all adults in Bangladesh use at least one form of tobacco product. The number is 37.8 million people in total. 46% of men and 25.2% of women consume tobacco. 

The prevalence of tobacco use among adults has decreased substantially from 43.3% in 2009 to 35.3% in 2017. While there is an overall decline in tobacco use, the median number of cigarettes smoked by a smoker per day increased from 6.4 to 7.6 sticks. On the other hand, the median number of bidis smoked decreased by 8.4%.