Public Health on Top

To incentivize tobacco industry is to ignore the PM’s directive to achieve a tobacco-free country. Unfortunately, this is precisely what the National Board of Revenues (NBR) has been doing year after year. This year, even before the 2019-20 national budget is proposed, NBR has declared that it would provide all types of assistance in exporting tobacco and tobacco products. Such an announcement without assessing the negative impact caused by tobacco export is utterly irrational. This is because tobacco cultivation and subsequent processing are related to a number of socio-economic, environmental and ecological devastating consequences. Considering the extent of the negative impact of tobacco, the PM has declared tobacco as a key obstacle to sustainable development. The revenues tobacco industry generates every year is almost negligible considering the amount of money and other resources spent in tobacco-related illness every year. Besides, a large portion of tobacco revenues goes out of the country. In a recent report, Tax Justice Network, a UK-based independent international network, exposed that in 2016 alone, British American Tobacco Bangladesh (BATB) shifted US$21 million of its profits by paying royalties, fees, and IT charges to related companies in the UK. In this case, BATB paid only a withholding tax of mere 10-20 percent under the Bangladesh-UK tax treaty instead of 45 percent corporate tax on its profit. Such clever attempt of BATB has reduced its Bangladeshi tax bill by US$6 million, an amount equivalent to per capita healthcare cost of more than 200,000 people of the country. Not only this, in 2017-18, BATB has not paid its tax dues for the low-tier cigarettes at a rate determined by the government which deprived the country of Taka 2000cr of revenues. Before that, the company has evaded tax amounting to Taka 1924 cr. by declaring its medium-tier cigarettes as low-tier cigarette, a matter which was later resolved by the Court.

Tobacco companies have already started a concerted media campaign ahead of the national budget. Their claim is that any increase in tobacco taxes will result in a surge in smuggling and other forms of illicit tobacco trade which will cause the government a huge loss in revenues. However, according to a World Bank report titled Confronting Illicit Tobacco Trade: A Global review of Country Experiences, published in February 2019, the increase in tobacco taxes has barely any relation with the illicit trade of cigarettes and the percentage of illicit trade of tobacco in Bangladesh stands at merely 1.8 percent, the lowest in 27 countries. So, the duty of the policymakers is to not get confused by the propaganda of tobacco companies and increase the prices of tobacco products through effective taxation measures.