The government has been working relentlessly to reduce the consumption of tobacco and achieve a healthier lifestyle for the people of Bangladesh. In an attempt to curb the tobacco consumption rate, the government has implemented two major tax hikes on the cigarette industry. One of which was imposed in the middle of the 2024-25 fiscal year. As noble and well-intended as the initiative is, 35.3% of adults use some form of tobacco products. Among them, 18% smokes, and 20.6% use smokeless tobacco products. This means that the number of smokeless tobacco users is higher than that of smokers. However, government's initiatives to reduce tobacco consumption is limited to rising price and tax of legal cigarette while illegal cigarette trade and other smokeless tobacco consumption thrives bypassing the law. Studies show that due to the use of smokeless tobacco, various diseases and premature deaths, including oral and mouth cancer, are increasing in Bangladesh. Expert opinion and data also shows rising concern in some unwanted outcome of the government's pursuit. A casual visit to any nearby locality will clarify the threatening increase in presence of illicit cigarettes.
The rise of illicit tobacco trade in Bangladesh has become a growing concern, fueled largely by recent sudden tax hike on legal cigarette business. While the government wishes to restrain smoking by increasing prices, reality is hitting differently. Smokers are shifting towards cheaper, unregulated illegal alternatives vastly available in the market, creating a thriving black market and leading to serious economic and health consequences.
Our economy is deeply interconnected with the global market, offering significant opportunities for our citizens and businesses. However, this interconnectedness also provides a fertile ground for various illicit networks that engage in criminal activities. Illicit trade generates substantial capital flows outside the formal economy, leading to significant revenue losses for both the government and legitimate industries. Moreover, it jeopardizes public health and security, while enriching criminals who are intent on undermining the rule of law.
A pressing concern of illicit tobacco trade is availability of illegal tobacco products to the youth. Illicit tobacco manufacturers often bypass regulatory scrutiny and any compliance -- selling to anyone. These products contain undisclosed raw materials and chemicals, further exacerbating the already well-known dangers of tobacco use. Consumers seeking a more affordable option unknowingly expose themselves to greater health hazards, undermining the very purpose of the government's tobacco control policies.
Beyond health risks, the illicit tobacco trade specifically illicit cigarette trade inflicts massive financial damage on the country. According to recent data provided by the NBR, approximately 25% of the total VAT comes from legal tobacco products, but now we are facing an alarming shortfall. When consumers turn to unregistered products, the government revenue is lost, and funding of essential public services is hampered. VAT collection from the cigarette industry has dropped by Tk 771 crore compared to the same period last fiscal year, making it imperative for policymakers to reassess their approach.
The consistent rise of illicit tobacco trade is a direct result of unwarranted and untimely tax increases. While tobacco tax increases are generally considered a highly effective public health tool and often justified to discourage smoking, in Bangladesh's case, it has merely started to redirect consumer behaviour towards illegal alternatives. The dramatic escalation of cigarette prices has placed an additional burden on lower-income consumers, who are inclining more to seek cheaper options. The market for illicit tobacco thrives in such an environment, making the overall tobacco problem even more complex. Economically, the ramifications are equally concerning. Currently, the government loses an estimated Tk 1,500-2,000 crore annually due to illicit cigarette sales.
Instead of enforcing unplanned and aggressive tax measures on legal cigarette business alone, it is high time for Bangladesh to understand the importance of predictable tax policy and enforcement of existing policy on all types of tobacco products available in the market. Illicit trade in tobacco products leads to impacts that are harder to quantify, such as loss of public trust in the integrity of key government and business sectors.
adv.aulad@gmail.com
© 2025 - All Rights with The Financial Express
