Policy Exchange has recently launched a seminal publication focusing on evidence-based tobacco tax policy that can better balance revenue consideration and public health priorities. As part of outreach to inform important stakeholders, key insights from the report were shared with senior officials at the relevant wings of the National Board of Revenue (NBR). This engagement marks the beginning of a collaborative process aimed at refining and strengthening the analytical findings through closer technical coordination with NBR. Policy Exchange is also reaching out to other important government and private sector stakeholders to disseminate the key findings of the report, a press release said.
The report presents a comprehensive simulation analysis of Bangladesh’s current tobacco tax system and explores how alternative excise structures, in line with global best practices, could influence government revenue, cigarette consumption, and market dynamics over the next decade. Drawing on household survey data, historical tax records, and internationally recognized modelling frameworks, the study compares the performance of the existing ad valorem structure with potential mixed and specific excise systems.
The research highlights that the present multi-tier ad valorem system may be approaching its structural revenue limits, and that alternative excise designs could deliver stronger long-term fiscal performance through greater policy flexibility in determining the rate. Preliminary findings suggest that structural adjustments to the current system could improve the stability and predictability of tobacco tax revenue while reinforcing health objectives. A shift from the existing ad valorem tax system to a specific tax regime on tobacco products could generate more than Tk22,000 crore in additional revenue over the next 10 years, beyond normal growth.
Tobacco remains a major revenue-generating sector in Bangladesh. In the last fiscal year, the government collected around Tk40,000 crore from the sector, accounting for nearly 9% of the National Board of Revenue’s (NBR) total revenue collection.
The printed publication was formally presented to NBR officials as part of an effort to support ongoing policy dialogue and evidence-based decision-making on tobacco taxation. Policy Exchange expressed their intention to work closely with the NBR to incorporate updated administrative data and technical inputs, allowing the simulation model to be further refined and aligned with the latest fiscal parameters.
Dr. Masrur Reaz, Chairman of Policy Exchange noted that “Tobacco taxation remains one of the most important sources of government revenue in Bangladesh. Strengthening the evidence base around how different tax structures affect revenue stability, consumption patterns, and market behavior is essential for designing policies that are both fiscally effective and socially responsible. Our research suggests that adopting a specific tax system could not only boost revenue but also reduce tobacco consumption by an additional 8% over the same period. That is a win on public health objective beyond revenue mobilization.”
The collaboration aims to strengthen the analytical foundation for future tobacco tax policy by combining independent research with official administrative data and technical expertise. The report contributes to the broader national conversation on improving tax policy efficiency, enhancing revenue mobilization, and aligning fiscal measures with public health objectives.
