Proposed Tobacco Control Act amendment ignores tax earnings, livelihoods

At a time when the local economy is under tremendous pressure from global economic headwinds, and the energy crisis arising from the Ukraine war, the government risks losing huge tax revenue and jeopardizing millions of small traders’ livelihoods, thanks to a controversial proposal to amend the tobacco control act.

The draft of the amended act has made obtaining a license mandatory for all types of tobacco businesses including small shops retailing tobacco products, putting a ban on selling tobacco items from moveable and makeshift shops, declaring hawking tobacco illegal and pronouncing the sale of single stick cigarettes unlawful.

On June 16, a draft of the amended version of the Smoking and Tobacco Products Control Act 2005 (amended in 2013) was published on the website of the Ministry of Health and Family Welfare for public opinion.

Business leaders and economists are of the view that in the name of health issues, the move of the Ministry of Health and Family Planning will deprive the government of thousands of crores of tax earnings in this trying time.

Acknowledging the health hazards of smoking, they have opined that the timing and strategy of the health ministry are unrealistic, as the government can only ill afford to put already hard-pressed people out of their business, and forsaking huge internal tax revenue amid acute resource constraints in the post-covid period to bankroll development projects.

The National Board of Revenue in the last 2021-2022 fiscal year earned nearly Tk 300 billion from the cigarette sector in value-added tax (VAT), or approximately 10 per cent of the total revenue income of the country.

“Cigarette sector is the largest contributor of VAT income. Any abrupt decision without the consultation of the revenue board would surely backfire, and nosedive revenue income,” a Member of the NBR said, preferring anonymity.

He said he is certain that the top levels of the administration is not aware of the move.

“They will not accept any move at the cost of huge revenue loss, with business shrinking, and revenue income faltering due to the economic headwinds.”

Experts say specific licensing requirements for retailers to sell tobacco and tobacco products, a ban on the sale of tobacco and tobacco products via moveable shops/hawkers, a ban on displaying tobacco products at points of sale, a ban on the sale of single sticks of cigarettes, the inclusion of tea shops in the definition of a public place – all these proposed provisions which will directly impact the livelihoods of low-income and marginalized people.

Talking to this scribe, Md Helal Uddin, President of the Bangladesh Shop Owners Association mentioned that they would take to the streets if the livelihoods of over three million shop owners and small traders are put in distress in the name of licensing and banning cigarette sales.

“It is simply a mockery to small traders. Why should they need licenses from the local government for selling cigarettes?” Helal questioned.

He said licenses should be required only for the manufacturers.

“I have already held talks with the officials of the Local Government Ministry to scrap licensing requirements for traders under the proposed act,” Helal said further.

Economist Dr Ahsan H Mansur said the move will not only lower consumption, but will affect the revenue earning of the country, and will boost the illegal trade of spurious tobacco products.

Many clauses of the proposed Act are not only impractical but also harmful to the economy, he added.

Mansur, also the Executive Director of the Policy Research Institute says the timing is wrong for the resource-constrained Bangladesh as the government already shelved many development projects, and sought rescue packages from the IMF to shore up the economy.

The government should concentrate on creating awareness against tobacco consumption, rather than harming a legally-run industry, he added.

He felt that the proposal to bring the street vendors under registration will reduce the sale of the top brands but will promote the sale of low-cost and spurious brands.

“Since these vendors will not get the supply of top brands produced by the multinational tobacco companies, they will sell low-quality brands of the local companies that are least interested in complying with rules and regulations,” Mansur opined.

Asked, why MNCs will not sell their products through vendors, Dr Mansoor said, “the reason is very simple- due to their corporate policies the MNCs will never be non-compliant”.

“This might lead to further illegal trading of cigarettes in the underground economy, as the current majority of cigarette vendors belong to low-income, lowly educated families who might not be privy to the licensing requirements of their business,” opined Helal, also a former Vice-president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI). 

Terming the proposed Act illogical under the present context, he said, at a time when economic recession looms large across the world, why the government should pass a law that would surely hit its top revenue-earning source.

Experts say without sacrificing revenue, and livelihoods of small traders, smoking habits can be reduced through increased awareness programmes.

According to World Bank and WHO Global Adult Tobacco Survey (GATS) data, the number of tobacco users in 2009 was 44 per cent of the total population. Through the visionary amendment of the Tobacco Control Act and rules in 2013 and 2016 respectively, the Government has successfully brought this number down to 34 per cent in 2017. This is a leap of 10 per cent in 8 years. At this rate by 2025, the smoking rate in Bangladesh can gradually come down to 24 per cent and over the next 15-20 years, it can go below 5 per cent by 2040-41.

Small traders and cigarette hawkers also expressed their utter frustration over the move, while many of them vowed to not comply with any such life-threatening law.

“I am a hawker, not a bank defaulter. I have been doing business for the last 18 years. If anyone asks me to leave the business, he or she has to take the responsibility of my 6-member family,” Aminul Islam, a hawker by profession in the Baitul Mukarram area said.

“We are not contesting the fact that tobacco consumption is highly injurious to health. We are just opposing the move to deprive us of our livelihoods”, he said.

Shawkat Hossain, owner of a wholesale grocery shop who also sells cigarettes from his shop at Shantinagar said, “Shop owners and small traders are now hard-pressed as their sale is nearly 30 per cent down in recent months. None of the business community will comply with any unlawful law.”

Shawkat says poverty and unemployment have also consequences on health, not only cigarettes alone.

The writer is an economic analyst