According to industry insiders, the proposal to amend the tobacco control act that makes obtaining a license mandatory for all types of tobacco businesses including small shops can potentially have adverse impacts on the small traders’ livelihood as well as government revenue.
“The government risks losing huge tax revenue while jeopardizing millions of small traders’ livelihoods, at a time when the local economy is under tremendous pressure from global economic headwinds and the energy crisis arising from the Russia-Ukraine war,” they said.
As per the draft, its implementation will also put a ban on selling tobacco items from moveable and makeshift shops, declaring hawking tobacco illegal and pronouncing the sale of single-stick cigarettes unlawful.
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 will directly impact the livelihoods of low-income people.
Small traders and cigarette hawkers said the move is frustrating with many of them vowing to not comply with any such law.
“I am a hawker, not a loan defaulter. I have been doing business for the last 18 years and if anyone asks me to leave the business, he or she has to take the responsibility of my family members,” Raihan Ali, a hawker in the Mirpur area, told Dhaka Tribune.
Another individual, a wholesale grocery shop owner in Banani said: “Shop owners and small traders are now hard-pressed as their sales are nearly 30% down in recent months. Poverty and unemployment also have consequences on health, not only cigarettes.”
According to the President of the Bangladesh Shop Owners Association Md Helal Uddin, licenses should be required only for manufacturers. He further said that they would take to the streets if the livelihoods of more than three million shop owners and small traders are upended in the name of licensing and banning cigarette sales.
“Why should small traders need licenses from the local government for selling cigarettes?” the association’s leader said.
“I have already held talks with the officials of the Local Government Ministry to scrap licensing requirements for traders under the proposed act,” Helal informed.
Business leaders, as well as economists, both agree that the Ministry of Health and Family Planning’s move for making licensing mandatory citing health issues will also deprive the government of thousands of crores of tax earnings at a time when it is needed the most.
The National Board of Revenue (NBR), in the last 2021-2022 fiscal year, earned nearly Tk30,000 crore from cigarettes in value-added tax (VAT), or approximately 10% of the total revenue income of the country.
“Tobacco sector is the largest contributor to VAT income. Any abrupt decision without the consultation of the revenue board would surely backfire, and nosedive revenue income,” an NBR official said, seeking anonymity.
He also said that he was dumbstruck and unsure if the relevant government wings and officials failed to comprehend the adverse impacts of the move or not.
Acknowledging the health hazards of smoking, experts also opined that the timing and strategy of the Health Ministry are unrealistic as the government will end up putting already hard-pressed people out of their business and lose huge internal tax revenue.
Experts also said smoking habits can be reduced through increased awareness programmes without sacrificing revenue, and the livelihoods of small traders.
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 fake tobacco products.
Many clauses of the proposed act are not only impractical, but also harmful to the economy, he added.
Mansur, who is also the Executive Director of the Policy Research Institute said that the timing is wrong for a resource-constrained Bangladesh as the government already shelved many development projects, and sought loan 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.
According to World Bank and WHO Global Adult Tobacco Survey (GATS) data, the number of tobacco users in 2009 was 44% of the total population.
Through the amendment of the Tobacco Control Act and rules in 2013 and 2016 respectively, the government has successfully brought this number down to 34% in 2017.
This is a leap of 10% in 8 years. At this rate, the smoking rate in Bangladesh can gradually come down to 24% by 2025 and it can go below 5% over the next 15-20 years.
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 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 multinational corporations will not sell their products through vendors, Dr Mansoor said: “The reason is very simple- due to their corporate policies, the multinational corporations will never be non-compliant”.
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.
Terming the proposed act illogical under the present context, experts and industry insiders have been pondering why the government should pass a law that would surely hit its top revenue-earning source at a time when economic recession looms large across the world.
