It is important to increase the tobacco tax to save our young generation
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It is important to increase the tobacco tax to save our young generation

Thoughts

Kazi Firoz Rashid
19 May, 2021, 11:35 am
Last modified: 19 May, 2021, 02:58 pm

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It is important to increase the tobacco tax to save our young generation

Raising taxes on tobacco products is one of the effective ways to achieve the goal of building a tobacco-free Bangladesh by 2040

Kazi Firoz Rashid
19 May, 2021, 11:35 am
Last modified: 19 May, 2021, 02:58 pm
Kazi Firoz Rashid
Kazi Firoz Rashid

We frequently talk about thinking about the next generation while deciding on policies. This line of thinking is also associated with conversations about the education system, economics or the job market. However, an issue concerning the next generation that does not get much importance is the goal to make the country a tobacco-free nation by enacting strong laws that address the harmful aspects of tobacco and tobacco-based products. 

Everyone knows how harmful tobacco is. The health risks of tobacco need to be taken very seriously.

There is no good side to tobaccoes. Instead, tobacco and tobacco products damage all the organs of a person from head to toe. If a woman is a smoker during her pregnancy, her fetus can be severely damaged.

Tobacco is linked to six of the eight leading causes of preventable deaths worldwide. According to the Global Adult Tobacco Survey (GATS), about half of all tobacco users die from tobacco use. 

Tobacco users have a 57 percent higher risk of developing tobacco-related diseases such as heart disease, stroke, COPD or lung cancer, and a 109 percent higher risk of other tobacco-related cancers. That is why more than 1 lakh 61 thousand people die from tobacco-related diseases every year in Bangladesh.

35 percent of adults (three and a half crore people) in our country use tobacco products. Moreover, minors between the ages of 13 and 15 do not shy away from using tobacco products. As a percentage, this number is about seven percent.

The number of people who do not smoke, but indirectly suffer from secondhand smoking, is higher than the total number of smokers overall. Numerically, that is about 40 million people.

Unfortunately, we are not as concerned about it as we should be. Additionally, it is not helped by the fact that Bangladesh is one of the highest tobacco-consuming countries in the world. 

In our country the price of cigarettes is very low, 'bidi' is cheaper. According to the Bangladesh Bureau of Statistics, the per capita national income (nominal) has increased by 25.4 percent in 2016-17 as compared to 2015-16. 

However, the price of most cigarettes has remained almost unchanged or increased slightly. As a result, cigarettes are becoming more readily available. Therefore, it is important to increase the price of cigarettes through a tax increase.

It is said that the government gets revenue of Tk22,000 crores annually from tobacco companies. But the health damage of tobacco is above Tk30,000 crore per year. 

This year's health sector budget is 29,000 crores. The amount of damage caused by tobacco is more than the budget of the health sector. 

It is also important to amend the current Tobacco Control Act with the extensive harms of tobacco in mind. I think that only the enactment of strong laws to control tobacco and reforms to the existing tobacco tax structure can make the country tobacco-free by 2040 announced by Hon'ble Prime Minister Sheikh Hasina.

The health risks of tobacco need to be taken very seriously. Photo: UNB
The health risks of tobacco need to be taken very seriously. Photo: UNB

Cigarettes are very cheap and readily available in the market due to the multi-layered tax structure of cigarettes in Bangladesh based on their features and brands. As a result, consumers can choose cheaper cigarettes instead of quitting. The availability of tobacco products must be reduced through tax increases.

In this case, for the financial year, 2021-2022, the introduction of a specific excise (supplementary) duty based on the price level with uniform coverage (supplementary duty 65 percent of the final retail price) for all cigarette brands is worth considering. Specifically, this involves setting the retail price of lower-tier cigarettes at Tk50 per 10 sticks and imposing a specific supplementary duty of Tk32.50.

For the medium tier cigarettes, the retail price of every 10 sticks should be fixed at Tk70 with a specific supplementary duty of Tk45.50. Furthermore, for high-tier cigarettes, the retail price of 10 sticks should be fixed at Tk110 and a fixed supplementary duty of Tk71.50 while the price of premium tier cigarettes can be fixed at Tk140 per 10 sticks with a supplementary duty of Tk91. During the medium term (2021-22 to 2025-26), the price and tax gap between cigarette brands are expected to fall from 4 to 2.

If the existing tax system is reformed as recommended for the 2021-22 financial year, tobacco usage will be reduced, lives will be saved, and government revenue will be increased. In addition, cigarette use will decrease by 1 percent per year. 

About 1.1 million adult smokers will be encouraged to quit smoking and more than 0.8 million young people will be discouraged from starting smoking. In the long run, it will be possible to prevent the premature deaths of 3 lakh 90 thousand current smokers and 4 lakh young people while earning additional revenue of Tk3,400 crore from supplementary duty, health development surcharges and VAT over the financial year 2020-21. 

Furthermore, higher cigarette prices will encourage relatively low-income people to quit smoking while the higher cigarette prices will limit smokers' ability to switch to cheap brands.

Additionally, I think it is possible to reduce the usage of tobacco if we address some of the other issues related to tobacco control. These include: 

To reduce the availability of tobacco products, specific supplementary tariffs have to be increased regularly in line with inflation and income growth. 

To make the taxation process easier, the existing divisions between tobacco products need to be removed. All smokeless tobacco products should be brought under the tax net. 

To formulate and implement a simple and effective tobacco tax policy (for a period of 5 years) that will contribute to the reduction of tobacco use, increase revenue and re-impose a 25 percent export duty on tobacco products.

The proposed tax recommendations will facilitate economic development as well as make Bangladesh's tobacco taxation policy one of the best in the world. Bangladesh is committed to achieving the goals of tobacco control in the global action plan for sustainable development and non-communicable disease prevention and control. 

To achieve this goal, raising taxes on tobacco products is a cost-effective tool. At the same time, raising taxes on tobacco products is one of the effective ways to achieve the goal of building a tobacco-free Bangladesh by 2040.

The proposed tobacco tax reform will generate additional revenue, which will enable the government to finance the country's health and development priorities. It will be undoubtedly beneficial for both the government and the people.


The author is a former Minister and Member of Parliament, Dhaka-6 constituency and Member, Standing Committee on Ministry of Liberation War Affairs and Ministry of Civil Aviation and Tourism.


Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.

Tobacco / tax

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