World Health Organization (WHO) estimates that globally seven million people die from tobacco use every year. Tobacco is associated with a number of serious, and often fatal, diseases: it may cause cognitive impairment and loss of brain volume; it increases the risk of dementia and stroke; and a third of the deaths caused by cancer are attributed to tobacco use. Seventy percent of the deaths from tobacco occur in low- and middle-income countries, and Bangladesh is one of them. The country has the second-highest rate of smoking prevalence and one of the lowest prices of tobacco in Asia. According to the Global Burden of Disease Study, 2018, tobacco use killed more than 160,000 people, including 26% of deaths among men and 10% among women in Bangladesh in 2016.
In this context, a team led by Dr Frank J. Chaloupka from the University of Illinois Chicago (UIC) was visiting Bangladesh in early 2018. Dr Chaloupka is a renowned health policy researcher and anti-tobacco activist. He is a recipient of the 2014 World No Tobacco Day Award of WHO and the 2011 John Slade Award of the Society for Research on Nicotine and Tobacco. The purpose of this visit was to find an appropriate research institute and fund a research project on Tobacco consumption and Taxation in Bangladesh. BIGD is one of the research institutes they contacted.
Dr Sultan Hafeez Rahman, the former Executive Director of BIGD, took this opportunity to bring the policymakers on board, with an aim to securing their early-endorsement of the research and improving the probability of research uptake. He arranged a meeting between the UIC team and the then Finance Minister Muhammad Abdul Mannan, MP. The Minister agreed that there was a dearth of research insights on tobacco consumption and taxation in Bangladesh. He also added that this research would be very helpful to modify the tobacco tax policy in Bangladesh.
After several meetings, the UIC team decided to fund the research project on tobacco taxation in Bangladesh to BIGD. Dr Rahman assigned Dr Nasiruddin Ahmed, former Chairman of the National Bureau of Revenue (NBR), as the lead of this research team in Bangladesh. Dr Ahmed was an apt choice for this role. He is an anti-tobacco activist with deep knowledge and expertise on the taxation system of Bangladesh. As a veteran bureaucrat with a PhD in Economics, he is also a competent researcher with a nuanced understanding of the policymaking process in the country. The team included Mr Jahangir Hossain, a retired Member (Grade 1) of NBR with experience on tobacco tax policy and Dr Rumana Huque, a Professor at the Department of Economics, University of Dhaka, who specialises in the health system and health economics. The research team also included Mr Md. Tariq Hassan, who was working as the Second Secretary (VAT Policy), NBR. The team in Bangladesh collaborated with the research team in UIC. Together, the research team possessed the necessary skills, expertise, and networks to generate high-quality research insights and to pull the critical levers for influencing policy uptake.
It was a mixed-method study. The researchers used both quantitative and qualitative research methods and both primary and secondary data to have a thorough understanding of the issue. For the proper assessment of supply and demand of tobacco, 5,036 stakeholders, including tobacco farmers, manufacturers, retailers, and 2,847 consumers were surveyed. BIGD also conducted focus group discussions (FGDs) with tobacco farmers and tobacco users, and key informant interviews (KIIs) with tobacco manufacturers and retailers.
Additionally, the researchers used the data from the Household Income and Expenditure Survey (HIES), 2016, done by the Bangladesh Bureau of Statistics, and data from NBR on the tobacco revenue. The team managed to talk to the senior-level personnel NRB and collect necessary data efficiently.
The data from NBR revealed that as the price of a brand of cigarette goes up, the consumers switch to a relatively cheaper brand instead of quitting. This is possible as there is a large variation of prices across cigarette brands in Bangladesh. NBR categorises the cigarette brands in four tiers based on the price—low, medium, high, and premium. In 2009-10, the government increased the tax on all tiers of cigarette. But since the relative increase in the price of low-tier cigarette was smaller than that of medium or higher tiers, consumption of low-tier cigarette skyrocketed while the consumption of medium-tier plummeted. Low-tier cigarettes have more harmful substances like tar; so, instead of reducing consumption, the increase in tax, in effect, exposed the consumers to higher risks.
By analysing the demand elasticity of tobacco—how responsive are consumers to the price—alongside government revenue, the study shows that merging the four tiers into two and imposing specific tax along with the current ad valorem tax, in which the tax is proportional to the estimated value of the cigarette, would reduce consumption while increasing government revenue. In the proposed system, all the cigarette brands will have a considerable increase in price, which will reduce the opportunity to switch to lower-priced brands.
Outfitted with these findings, the BIGD team devised a policy engagement strategy that could work. As mentioned earlier, the research had an endorsement from the most critical government authorities, the Ministry of Finance and the NBR. After the completion of the study, BIGD conducted closed-door meetings, first with the high-level officials of the Ministry of Health and then with NBR to discuss the policy insights found in the study. The closed-door meetings provided the space for frank conversation, clarification, and persuasion. Afterwards, BIGD organised a larger dissemination conference with both the Health Ministry and NBR officials. Another dissemination event was organised for the anti-tobacco activists and the media. This event brought in the critical public stakeholders such as the National Professor Brig. (Rtd.) Abdul Malik, Founder and President of the National Heart Foundation of Bangladesh. Dr Nasiruddin Ahmed was interviewed by Channel-i to talk about the significance of the findings. Finally, there was a research report launching ceremony, where the Chief Guest was the Planning Minister Mr Mannan. In the ceremony, the minister thanked BIGD for the work, which, he said, would provide useful insights into reforming tobacco taxation in Bangladesh. Finally, in November 2019, the Planning Minister pledged to include the study recommendations in the upcoming eighth five-year plan.
Tobacco manufacturers are some of the giant players in the Bangladesh economy; the government earns 11% of the tax revenue from tobacco alone. Only time will tell whether and to what extent the study recommendations will be implemented. But the inclusion of the key recommendation in the government’s plan is certainly a step in the right direction.
