Weak enforcement, market distortions weaken tobacco tax system

Experts on Saturday said Bangladesh's tobacco tax system is failing to curb consumption not because taxes are low on paper, but because enforcement gaps, market distortions and an outdated multi-tiered structure continue to undermine policy effectiveness.

Speaking at a national dialogue titled "Reimagining an Effective Tobacco Tax System in Bangladesh", organised by the Power and Participation Research Centre (PPRC) in the capital, speakers argued that the country's tobacco-control efforts are being weakened by under-declared production, an expanding informal market and the absence of a modern track-and-trace mechanism.

Despite officially high tax incidence, they said cigarettes remain easily affordable, allowing consumption levels to remain stubbornly high. The multi-tiered system, in particular, was singled out as a structural flaw that lets smokers shift to cheaper brands rather than quit -- effectively neutralising the intended impact of higher taxation.

Speakers stressed that the economic returns from tobacco are negligible when compared with the profound social and health costs it imposes. They said the persistence of ineffective taxation reflects administrative weaknesses rather than revenue priorities, and urged a transition to a simplified specific excise system aligned with global standards.

PPRC Executive Chairman Dr Hossain Zillur Rahman said the core challenge is not merely technical reform but confronting entrenched narratives that overlook the human and economic toll of tobacco use. He noted that tobacco-growing districts remain among the poorest, illustrating how the industry's benefits bypass local communities.

Dr Rahman also highlighted the lack of updated national data, noting that no comprehensive smoking survey has taken place since the Global Adult Tobacco Survey (GATS) 2017. Evidence-based reform, he said, requires current data and a grounded understanding of field realities.

Prof Shafiun Nahin Shimul, director of the Institute of Health Economics at Dhaka University, said the current pricing structure encourages smokers to move across tiers rather than quit.

He disputed long-standing myths, emphasising that higher taxes are pro-poor because low-income smokers are more price-responsive, illicit trade stems from weak enforcement, and revenues rise when taxes increase due to the inelastic nature of tobacco demand.

He reiterated that tobacco's economic contribution is less than 1.0 per cent, while its health and social costs continue to escalate. Participants also raised concern over under-reported production, weak monitoring and the lack of a track-and-trace system to deter tax evasion.

MM Fazlul Haque, former member (taxes) of the NBR, pointed to administrative challenges including the dominance of informal traders, limited enforcement capacity and heavy dependence on indirect taxes.

He said adopting a specific excise system is crucial if Bangladesh is to control evasion, modernise its tax structure and ensure predictable revenues.

The event concluded with consensus that without stronger monitoring, updated data and a simplified tax system, Bangladesh's tobacco-control goals will remain out of reach. Participants expressed hope that the consultation would inform a more enforceable and forward-looking tax regime capable of improving both public health and fiscal outcomes.

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