Experts call to for adopting Sri Lanka’s tobacco tax model

Tobacco tax experts from Bangladesh and Sri Lanka have said that Bangladesh should consider adopting Sri Lanka’s experience with specific taxation on tobacco products to boost revenue and protect public health.

They made the call at a webinar titled “Advancing Tobacco Tax Policy and Price Measures: Lessons from Sri Lanka,” jointly arranged by the Bureau of Economic Research (BER) of Dhaka University, Bangladesh Network for Tobacco Tax Policy (BNTTP) and Sri Lanka’s Take Turn Foundation on Tuesday.

The speakers said that although Bangladesh ranks highest in South Asia with an 83% tax rate on cigarettes, compared to Sri Lanka’s 68%, cigarette remains nearly seven times more affordable in Bangladesh than in Sri Lanka. So, Sri Lanka’s specific tobacco tax model should be adopted.

Raj Prabu Rajakulendran, lead economist at Verité Research, Sri Lanka; and Asitha Dharshana Fonseka, director of Take Turn Foundation; presented the keynote addresses with Professor Dr Nasiruddin Ahmed, former chairman of National Board of Revenue (NBR); in the chair.

Moderated by Ishrat Zahan Aishi, research associate at BER; the webinar was addressed, among others, by Dr Nishan de Mel, executive director of Verité Research; Sameera Lakmal, director–programme at Take Turn Foundation; Advocate Syed Mahbubul Alam, senior technical advisor at Vital Strategies; and Hamidul Islam Hillol, project director at BER.

In his presidential speech, Dr Nasiruddin Ahmed said that tobacco contributes nearly 10% of total revenue. The current ad-valorem system is fundamentally flawed and compounded by weak tax administration. Mutual knowledge sharing with Sri Lanka would help Bangladesh overcome these structural and administrative hurdles, he opined.

Raj Prabu Rajakulendran said that Sri Lanka’s framework allows the government direct control over retail prices. In contrast, Bangladesh relies fully on ad-valorem tax structure, which leaves baseline price-setting power largely in the hands of manufacturers.

Dr Nishan de Mel emphasized that regardless of current prices in Bangladesh, the target should be to increase prices at least sixfold.

Asitha Dharshana Fonseka said that raising tobacco taxes could generate sufficient revenue to avert proposed tax increases on essential services like electricity and mobile data, easing the burden on general consumers while directing funds toward public healthcare. Sameera Lakmal urged Bangladesh to stay vigilant against tobacco industry interference.

Syed Mahbubul Alam said that Sri Lanka’s evidence-gathering and policy presentation strategies serve as a valuable benchmark for Bangladesh as it seeks to introduce specific taxes alongside ad valorem taxation.

Hamidul Islam Hillol stressed that leveraging insights from Sri Lanka's journey will make this challenging goal far more achievable.