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Bangladesh budget proposes spike in taxes to get harm down and revenue up

The Bangladeshi government’s latest annual budget proposal lists a substantial rise in taxes on nicotine products, including heated tobacco devices and combustibles, some cigarettes, e-cigarette devices – and even cigarette paper.

Finance minister Mustafa Kamal said that to reduce the consumption of tobacco products and increase revenue from this sector, the price and supplementary duty on specific packs of cigarettes would be raised.

Kamal also proposed an increase to almost 150% supplementary duty on all products containing tobacco, reconstituted tobacco, nicotine, or tobacco or nicotine substitutes, intended for inhalation without combustion; other nicotine-containing products intended for the intake of nicotine into the human body; cigarette paper; and parts included in electronic devices.

The existing rate of import duty on “electric cigarettes and similar personal electric vaporising devices” has been proposed to be raised from 5% to 25%.

 

Will high taxes help make a tobacco-free country?

 

The slew of high taxation on all nicotine products has followed promises made by the government to make Bangladesh a tobacco-free country by 2040. Last year, the country’s health ministry issued a draft to introduce amendments to the current tobacco laws to restrict sales and purchases.

In January 2023, senior minister Enamur Rahman said: “All parties will benefit if the law is passed quickly. The revised draft law will play an effective role in reducing tobacco use. This act needs to be passed quickly to make the initiative taken by the prime minister to protect public health successful.”

The revised draft is expected to introduce, among other things, tighter restrictions on smoking in public spaces, locations for the sale of nicotine products, and bigger health warnings on the packets.

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    Some media outlets have recently reported that Hossain Ali Khondoker, co-ordinator of the National Tobacco Control Cell, said the government was working on amending Act No. 11/2005 on smoking and tobacco products usage (Tobacco Control Act) to ban electronic nicotine delivery systems (ENDS). Khondoker warned against e-cigarettes and said the harm-reduction approach was a misleading concept that misguides youth. E-cigarettes are not defined as tobacco products in the Tobacco Control Act or its amendments.

     

    Reducing harm and increasing revenue

     

    According to Tobacconomics, an increase in minimum price across all brands reduces tobacco harm and raises revenue. The introduction in 2023-2024 of a tiered specific excise with a uniform tax burden (excise share of 65% of the final retail price) across all cigarette brands will result in almost 1.4m adults quitting smoking, and save the lives of approximately 1m adults and under-age smokers in the long term.

    Many countries in South Asia, including India, have introduced restrictions on the sale and purchase of e-cigarettes, vapes and liquid nicotine cartridges.

    According to the 2017 Global Adult Tobacco Survey, 35.3% of Bangladesh’s population uses tobacco. However, the percentage of smokeless tobacco users (20.6%) is higher than that of smokers (18%). And at the time of the survey, the proportion of users of any kind of electronic cigarettes was just 0.2%.

    The Bangladeshi prime minister, Sheikh Hasina, has repeatedly stated that her aim to make the country tobacco-free by 2040 is a priority, and that one of the best ways to do so is by overhauling the tobacco tax and restricting the imports of nicotine and nicotine-based products into the country.

    – Swapti Gupta TobaccoIntelligence contributing writer

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    TobaccoIntelligence

    This article was written by one of TobaccoIntelligence’s international correspondents. We currently employ more than 40 reporters around the world to cover individual nicotine markets.

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