Tobacco-free Bangladesh: Why just taxing tobacco won’t do the trick

Smoking kills more than eight million people every year worldwide, which is more than AIDS, tuberculosis and malaria combined. 

Of these, more than seven million deaths are caused by direct tobacco use and 1.2 million are the result of non-smokers being exposed to second-hand smoke. 

It's very disappointing that Bangladesh is one of the biggest tobacco consuming countries in the world. Global Adult Tobacco Survey (GATS) found that in 2017, 35.3% of adults in Bangladesh consumed tobacco. Of those, 46% are men and 25.2% are women. 

However, this 35% of adults constitutes 37.8 million people of Bangladesh. A joint study by the Department of Economics of Dhaka University and the Bangladesh Cancer Society found that 1.61 lakh people died and 2.5 lakh people became paralysed due to tobacco-related diseases in 2018 alone.

According to conventional wisdom, the most effective way to reduce tobacco use is to increase the price of tobacco products through tax increases. But do tobacco taxes really make up for the damage it causes?  

The answer is actually "No". Although a large portion of the money comes from tobacco taxes, it seems like it plays an important role in GDP. But the truth is, tobacco causes more loss than the amount of tax collected every year. 

Data from the Bangladesh Cancer Society shows that in the 2017-18 fiscal year, the economic loss of tobacco use amounted to Tk 30,560 crore, which was about 1.4% of the GDP. 

The revenue earned from the same fiscal year from the tobacco sector was only Tk 22,810 crore. The loss was Tk 7,760 crore. 

To reduce tobacco consumption, the government took many initiatives and announced plans to build a tobacco-free Bangladesh by 2040. But even after increasing tobacco tax each year, consumption is not decreasing as expected. 

A survey from the Global Adult Tobacco Survey (GATS) showed, in the last eight years till 2017, tobacco use in Bangladesh among aged 15 and above has decreased only by 18.5%. These are not enough to reach the goal of a tobacco-free Bangladesh.

Bangladesh is one of the top three countries that have the most tobacco company intervention, according to the Global Tobacco Industry Interference Index 2019. The Bangladesh government itself holds 9.49 shares of British American Tobacco Bangladesh, the company behind popular cigarette brand Benson & Hedges. 

Increasing tobacco tax each year won't do much to reduce consumption if the cultivation of tobacco and the government's shares in tobacco companies remain the same. Therefore, besides imposing taxes, the government needs to withdraw its shares in British American Tobacco and needs to impose more strict restrictions on tobacco cultivation.

Having multi-tier tobacco products in the market is also not helping when it comes to reducing tobacco consumption. With four types of cigarettes to choose from in the Bangladeshi market, consumers always have the option to get a cheaper brand whenever the price of cigarettes goes upwards. 

As of now, low-end cigarettes account for 65% of the market in Bangladesh. So, even if the price goes up, something always remains within the reach of the people. 

The government needs to take steps to reduce cigarette types to two so that the price of cigarettes does not differ much from one another. 

According to Bangabandhu Chair Professor of Dhaka University and former Bangladesh Bank Governor Dr Atiur Rahman, although taxes are rising every year, so is per capita income. So, it is not possible to reduce the rate of smoking by raising taxes according to packaging. 

Therefore, he suggests increasing the price of cigarettes and then imposing a specific VAT to help reduce tobacco consumption.

Since cheap cigarettes are dominating the Bangladeshi market, the companies are keeping the price of cheap cigarettes within the reach of low-income people and increasing the price of premium cigarettes only to keep the market afloat after the tax hike, he says.  

"So, increased taxes are not having much effect on a large section of tobacco users. In this case, it would be beneficial if the government fixes the price of cigarettes based on the level," Dr Atiur further said. 

To reduce tobacco consumption, alternative employment must be provided to tobacco growers and workers involved in tobacco production. Besides, unregistered factories must be monitored by bringing them under registration.

Despite all this, the rate of tobacco use cannot be reduced unless awareness is created among the people.