Bangladesh: Overveiw of Tobacco use, Tobacco control legislation, and taxation

Executive summary
Bangladesh was one of the first countries both to sign and to ratify the WHO Framework Convention on Tobacco Control. Prime Minister Sheikh Hasina in 2016 pledged the commitment of her government to work towards full compliance with the WHO FCTC and stated that overhauling tobacco taxation was high on the agenda as the most powerful measure for reducing tobacco use. Bangladesh aims to be tobacco-free by 2040.

Currently, Bangladesh is one of the largest tobacco-consuming countries in the world, where an estimated 46 million adults were users of a variety of smoked and/or smokeless tobacco products. It was estimated that in 2010, about 25% of all deaths among men aged 25 to 69 years were attributable to smoking which results in an average loss of 7 years of life per smoker.

In 2010-2018, tobacco tax rates were annually increased. In 2011-2017, tobacco tax revenue grew by 104% in nominal terms or by 38% in real (inflation-adjusted) terms. Overall, tobacco consumption apparently declined over those years, but the rate of decline was small as with growing population incomes, cigarette affordability was not eventually reduced. Some other factors also undermine the effectiveness of tax increases in reducing tobacco consumption in Bangladesh. The structure of tobacco consumption gradually shifted from bidi and smokeless
tobacco use to cigarette smoking. However, the multi-tiered cigarette excise tax structure incentivized lower-price cigarette consumption. The share of low-priced cigarettes also increased as the tobacco industry’s market expansion and pricing strategy keep low-price cigarettes affordable.

Despite the tobacco tax increases, cigarette prices and excise tax rates are still much lower in Bangladesh than in most neighboring countries and should be further increased. Cigarette smuggling into Bangladesh is rather low, and smuggled cigarettes are typically more expensive in comparison to domestic low-priced cigarettes. The following changes in tobacco tax rates and structure could both decrease tobacco consumption and increase tobacco tax revenue in the country:

• Cigarette ad valorem excise rates should be unified for all kinds of cigarettes at the level currently used for the premium cigarettes.
• Additional unified specific excise tax should be introduced for all kinds of cigarettes.
• Excise taxes for bidi and smokeless tobacco products should be increased high enough to minimize downward shifting to less expensive products.
• After the above changes are introduced, the unified specific rates for all kinds of tobacco products should be annually increased to make tobacco products less affordable over time in order to reduce tobacco consumption and the prevalence of tobacco use in line with FCTC provisions.

Tobacco control monitoring, including the collection of economic information on tobacco products sales, prices, and other indices, should be much improved in the country to support more accurate forecasts of the outcomes of the current and future tobacco control activities.

 

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World Bank Group