The Economics of Tobacco Taxation in Bangladesh

Due to the fatal risks tobacco poses on human health, countries around the world are coming up with strategic plans to reduce tobacco consumption. But Bangladesh—a country with the second-highest rate of smoking prevalence in Asia—has yet to develop an effective plan. One of the ways Bangladesh can discourage tobacco consumption is by bringing changes in the tobacco taxation system. If so, what are those changes? And how effective are they?

The current tobacco taxation system in Bangladesh is based on the ad valorem tax structure which, according to critics, is not effective enough to control tobacco consumption. The report proposed to reform this structure by adding specific tax with it. This will increase government revenue and simultaneously reduce tobacco consumption.