A survey on Impact of the price change of tobacco products in the national budget 2020-21 at the retail market

Tobacco is the single most preventable cause of death and disabilities posing major threats to public health. According to a study by the Bangladesh Cancer Society & Dhaka University, in 2018 more than 126 thousand people died from tobacco-related diseases and Bangladesh lost BDT 30570 crore as a health cost to treat tobacco-related diseases. In this situation, tobacco control has become a top priority for health activists and the govt. has set a goal to make Bangladesh tobacco-free by 2040. So organizations working for tobacco control demand an increase in tobacco tax and imposing the specific tax. A recent study found that cigarette prices have raised less than the essential food item in Bangladesh. Different studies proved that a proper increase in tobacco prices helps to curb tobacco usage.

The current tax structure on tobacco products is very complex and it seems that such tax structure cannot play any role in discouraging the use of tobacco. Cigarettes are very cheap and readily available in the market due to the multi-layered tax structure. Consumers are choosing cheap cigarettes instead of quitting smoking. So, it is important to see whether the current tax structure really helpful in reducing the consumer or not.

The profitability of the tobacco company increased due to the limitation of pricing on tobacco products. In the last five years, the production of the tobacco company has decreased by 3 percent but the profit has increased by about 28 percent. This is because the price of tobacco products is increased in such a way that the profit of the tobacco company increases and does not play any role in reducing smoking.

Recently Bangladesh National Parliament passed the budget for the fiscal year 2020-21. Anti-tobacco organizations think that the proposed price hike of cigarettes in the 2020-21 national budgets is not enough to discourage people from using tobacco products. So, it’s needed to explore the real scenario. This survey will find the retail prices of tobacco products and pricing strategies of tobacco companies in the wake of changes in prices and taxes in the national budget.

This survey was prepared in Bengali, To read the full research paper please click the download button.

Bureau of Economic Research (BER), University of Dhaka