Stop tobacco companies’ interference in the tax process

StarAvis Desk
StarAvis Desk
6 Min Read
The speakers in a roundtable to disseminate the findings of a study titled “Tobacco Company Interference with Tobacco Taxation Process in Bangladesh” held at a city auditorium in Dhaka on May 14, 2022

The Civil Society leaders and anti-tobacco practitioners from Bangladesh said that the government should divest its investment from the tobacco company to show its commitment towards a tobacco-free country by 2040.

They stressed on the need of adopting a comprehensive tobacco tax policy including the end of tax preferential treatments for tobacco companies. The speakers also said political parties and the government require political commitment to achieve the goal of becoming tobacco free country.

The speakers said this on Saturday, May 14, in a roundtable to disseminate the findings of a study titled “Tobacco Company Interference with Tobacco Taxation Process in Bangladesh” held at a city auditorium in Dhaka. VOICE, a rights-based research and advocacy organization organized the event to share the findings of the study. The event was presided over by eminent economist and also PKSF Chairman Dr. Qazi Kholiquzzaman Ahmad while Former Secretary and NBR Chairman Dr. Muhammad Abdul Mazid and Dr. Nasiruddin Ahmed spoke as expert panelists. Ataur Rahman Masud, Senior Policy Advisor of Campaign for Tobacco Free Kids moderated the event.

Speaking at the discussion, the speakers further said National Board of Revenue (NBR) should prioritize public health over tobacco company’s profitability as tobacco tax revenues are a fraction of the public and private health cost burden resulting from tobacco use.

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They urged the government to prohibit tobacco company representatives and affiliates from directly or indirectly participating in tobacco control agenda setting, policymaking, and other government positions and processes that pose inherent conflicts of interest.

Ahmed Swapan Mahmud, executive director of VOICE presented the keynote paper. Referring the study, he said that many strong evidences of illegal interference of the tobacco industry have come out in the findings. 

To understand the types and extent of tobacco company influence on tax policymaking in Bangladesh, researchers conducted 23 key informant interviews with 4 types of stakeholders in tobacco control policy:  policymakers, Journalists, tobacco control practitioners and researchers between March and May 2021.

Responses from key tobacco tax policy stakeholders indicate that there is high tobacco industry involvement in the tobacco tax policymaking process. The study found that tobacco companies have close ties and mutually beneficial relationships with various government offices and high-ranking individuals.

The findings said that the tobacco companies are given preferential treatment during key tax policy reform process phases. Participants in the study reported that the National Board of Revenue (NBR) will not impose new tax provisions on tobacco until they have reached an agreement with the tobacco company to the company’s misrepresentation of their economic contributions.

They said that tobacco companies provide gifts in cash and kind as well as trips abroad to National Board of Revenue (NBR) and other relevant government officials in exchange for greater input and favorable consideration in the tax reform process.

“The Bangladesh Government endorses tobacco company donations and other corporate social responsibility (CSR) activities,” the study finds.

They said that elected officials use BAT’s (British American Tobacco) well-established forestation, clean drinking water, and solar power programs to show development progress and gain favorability with voters. They (elected officials) also join BAT and smaller tobacco companies’ CSR activities to improve their public image.

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The study findings identified several conflicts of interest between tobacco companies and the Government of Bangladesh including owning shares of British American Tobacco Bangladesh (BATB) and holding 6 of 10 BAT Bangladesh board members by current or former government officials.

Participants reported several ways how tobacco companies evade taxes, likely with NBR knowledge.

In his speech, Dr. Qazi Kholiquzzaman Ahmad, Chairman of PKSF said, the government should divest from British American Tobacco Company and sell all shares to show its commitments to make the country free of tobacco.

He said, a uniform specific tobacco tax rate would be far more effective for reducing tobacco consumption and its affordability in Bangladesh. “This system tends to lead to higher prices for all brand levels, reduces the incentive to switch to lower-priced brands, and is easier to administer when compared to ad valorem one,” he said.

Dr. Nasiruddin Ahmed, Former Chairman, National Board of Revenue, said, the firm political commitment is prerequisite for a tobacco free Bangladesh. He said, tobacco industry’s interference in the national policy making has been going on for many years in a very strategic manner.

They lobbied with the concerned ministries and gained permission to continue production, marketing, and distribution of tobacco even during Covid lockdown with the help of an outdated law, “Essential Commodities Act 1956”, which categorizes cigarette as an essential commodity in Bangladesh.

Former Chairman of National Board of Revenue Muhammad Abdul Mazid said no political party has kept “tobacco free Bangladesh” as an agenda in their official manifesto. He said, tobacco industry’s involvement in any youth, public education, or other tobacco control initiatives should be banned. “CSR activities carried out by the tobacco industry also should be prohibited,” he added.

Among others, Abdus Salam Mia, Grants Manager, CTFK, Fazlul Haq Mazumder, Development Researcher, and Sharmin Rini, an activist spoke in the program.

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