For the second time, I had the opportunity to exchange views on tobacco taxation with Dr. Guillermo A. Sandoval, Technical Officer (Fiscal Policies for Health), Department of Health Determinants, Promotion and Prevention, World Health Organization (WHO), Geneva. We also held detailed discussions on the proposed tobacco tax structure for the upcoming fiscal year 2025–26. Journalists working on tobacco taxation and representatives of tobacco control organizations in Bangladesh participated in the meeting, which was held at the National Tobacco Control Cell. Dr. Sher Malik of Johns Hopkins University also attended the discussion on 22 April 2026.

In my intervention, I highlighted key issues in the Bangladesh context, including the cigarette supply chain, weaknesses in the current tier-based tax system, limitations in Maximum Retail Price (MRP) enforcement, and potential avenues for corporate tax evasion. I also emphasized the need for stronger and more structured engagement of local tobacco taxation experts in the policy-making process.

In particular, I stressed that proper implementation and strict monitoring of the Maximum Retail Price (MRP) printed on cigarette packs is essential. Confusion between “maximum retail price” and “retail price” enables tobacco companies to exploit loopholes and evade taxes. Such misinterpretation weakens tobacco control measures and may indirectly legitimize tax avoidance practices.

I also raised concern that, although Bangladeshi law mandates the use of the term “Maximum Retail Price” on cigarette packs, some tobacco control organizations continue to use the term “retail price”, which has historically been used by the cigarette industry. This is inconsistent with legal provisions and creates unnecessary confusion in tobacco control communication.

During the meeting, Ibrahim Khalil, Senior Project and Communications Officer at the Bureau of Economic Research (BER), University of Dhaka, highlighted that the use of the terms “tadurdhho” or “and above” in the cigarette pricing structure has created significant opportunities for tax evasion. Currently, within the four-tier system, the MRP for the lowest tier (10-stick pack) is set at “60 Taka and above,” and for the middle tier at “80 Taka and above.”

This wording allows companies to introduce multiple price points within the same tier, such as 60, 70, and 75 Taka packs. It also enables cigarettes of varying prices to be marketed within and across tiers under the existing approval framework of the National Board of Revenue (NBR).

As a result, companies can use the same banderole while reporting sales in a way that minimizes tax liability under the ad valorem system. For example, in the lower tier, an 83% tax rate results in approximately 49.90 Taka per 60 Taka pack and 62.25 Taka per 75 Taka pack-a difference of about 12 Taka per pack.

To illustrate, if 100 packs are sold in the lower tier (50 packs at 60 Taka and 50 packs at 75 Taka), but reporting is adjusted to show 75 packs at 60 Taka and 25 packs at 75 Taka, this price reclassification can result in an estimated tax loss of around 300 Taka based on the per-pack differential.

Ibrahim Khalil and I jointly conducted research last year on tax leakage caused by the use of the term “and above.” After presenting our findings, Dr. Sandoval and Dr. Sher Malik acknowledged the seriousness of the issue and agreed that this wording enables the proliferation of multiple price points within a single tier, thereby facilitating tax evasion. They emphasized that this issue requires urgent policy attention.

It is also important to note that cigarette production costs remain relatively stable; therefore, price variations largely reflect structural weaknesses in the tax system rather than production dynamics, resulting in significant revenue loss for the government.

At the same time, analysis of the Bangladesh cigarette market shows that the lower and middle tiers together account for nearly 90% of the total market share. Therefore, merging these two tiers may not be appropriate at this stage.

Furthermore, according to National Board of Revenue (NBR) data, revenue from the bidi sector increased in the 2024–25 fiscal year compared to 2023–24. This suggests that the assumption of declining bidi consumption may not fully align with actual revenue trends.