Policy Exchange has published a report examining Bangladesh’s tobacco tax structure and presented its key findings to senior officials of the National Board of Revenue (NBR) as part of efforts to support evidence-based policy discussions on tobacco taxation.
According to Policy Exchange, the publication focuses on how alternative excise tax structures could better balance government revenue objectives and public health priorities. Key insights from the report were recently shared with officials from relevant wings of the NBR, marking the start of technical engagement aimed at refining the analysis through closer coordination with the revenue authority.
The organisation said it is also sharing the report’s findings with other government agencies and private sector stakeholders to broaden discussion on tobacco taxation policies.
The study presents a simulation analysis of Bangladesh’s current tobacco tax system and evaluates how alternative excise structures aligned with global practices could influence government revenue, cigarette consumption and market dynamics over the next decade. The analysis draws on household survey data, historical tax records and internationally recognised modelling frameworks.
The report compares the existing multi-tier ad valorem tax structure with potential mixed and specific excise systems. According to the analysis, the current system may be approaching its structural revenue limits, while alternative tax designs could improve long-term fiscal performance by providing greater flexibility in determining tax rates.
Preliminary findings suggest that adjustments to the existing system could enhance the stability and predictability of tobacco tax revenue while supporting public health objectives. The report estimates that a shift from the current ad valorem system to a specific tax regime could generate more than Tk22,000 crore in additional revenue over the next 10 years beyond normal growth.
Tobacco remains a significant source of revenue in Bangladesh. In the last fiscal year, the government collected about Tk40,000 crore from the sector, accounting for nearly 9 percent of the NBR’s total revenue collection.
The printed publication was formally presented to NBR officials to contribute to ongoing policy dialogue and evidence-based decision-making on tobacco taxation. Policy Exchange said it intends to work with the NBR to incorporate updated administrative data and technical inputs to further refine the simulation model.
Policy Exchange Chairman Dr Masrur Reaz said tobacco taxation remains one of the major sources of government revenue in Bangladesh and emphasised the importance of strengthening the evidence base on how different tax structures affect revenue stability, consumption patterns and market behaviour.
He said the research suggests that adopting a specific tax system could increase government revenue while potentially reducing tobacco consumption by an additional 8 percent over the same period.
According to Policy Exchange, the collaboration aims to strengthen the analytical basis for future tobacco tax policy by combining independent research with official administrative data and technical expertise. The report is intended to contribute to broader discussions on improving tax policy efficiency, increasing revenue mobilisation and aligning fiscal measures with public health objectives.
