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Taxation of Tobacco Productsin Bangladesh
Fidis fm th 2009 ITC Baadsh Suvy
AprIl 15, 2010
The International Tobacco Control Policy Evaluation Project
ITC projeCT WorkIng pAper SerIeS
nia nais ad Ummu Hasaath ruthbah
University of Dhaka, Bangladesh
gffy T. F
University of Waterloo and
Ontario Institute for Cancer Research, Canada
Suggested Citation: Nargis, N., Ruthbah, U. H., and Fong, G. T. (April 2010). Taxation of Tobacco Products in Bangladesh: Findings from th
2009 ITC Bangladesh Survey. ITC Project Working Paper Series. University of Waterloo, Waterloo, Ontario, Canada.
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TaxationofTobaccoProductsin
Bangladesh:Findingsfromthe
2009ITCBangladeshSurveyNigarNargis,UmmulH.Ruthbah,andGeoffreyT.Fong
April2010
Tobaccouse isa leading causeofdeath anddisability inBangladesh, asit is inthe vast
majority of countries in the world. Currently, there are 41.1 million people who usetobacco, including 20.9 million people who smoke either cigarettes or bidis or both.1
Although an estimated 57,000 people die a year of tobacco use,2 this will climbconsiderablyinthenearfuture.Infact,epidemiologicalestimatesfromIndiasuggestthat
aboutonethirdtoonehalfof the20.9millionpeoplewhosmokewilldieof asmoking
related disease, at an average loss of life between 610 years.3 The level of tobaccoconsumption is moved even higher in Bangladesh by a bottom heavy demographic
structure(57.7%ofthetotalpopulationisagedbelow25yearsandonethirdisbelow15years),widespreadilliteracy(halfoftheadultpopulationisilliterate),andpoverty(about
halfofthetotalpopulationlivesbelowthepovertyline).4Byanystandard,then,tobacco
use representsa criticalthreat tothe health andwelfareof theBangladeshi peopleandstrongactionmustbetakentoavertthepresentandeverdeepeningthreat.
Bangladeshhasahistoryofacommitmenttotobaccocontrol.ItwasthefirstcountrytosigntheWHOFrameworkConventiononTobaccoControl(FCTC)andamongthefirst40
countries to become a Party to the FCTC. The FCTC obligates the Parties to engage intobaccocontrolactionsacrossabroadrangeofpolicydomains,includingmoreprominent
warning labels, bans/restrictions on advertising, smokefree laws, reducing illicit trade,
andincreasesintobaccotaxationandharmonizationoftaxationacrosstobaccoproducts.
In 2005, Bangladesh enacted the Tobacco Control Act (TCA), with the correspondingregulations being implemented in 2006. However, recent evidence from two nationally
representativesurveysconductedin2009theGlobalAdultTobaccoSurvey(GATS) 5and
theInternationalTobaccoControl(ITC)BangladeshSurvey 6havefoundthatdespitetheenactment of the TCA, Bangladesh has experienced an alarming increase in tobacco
consumptionoverthepastfiveyears.
1 ITC Project. ITC Bangladesh National Report. University of Waterloo & University of Dhaka.2
World Health Organization. Impact of Tobacco-Related Illnesses in Bangladesh. World Health Organization,
South East Asia Region, New Delhi, India, 2006.3
Jha, P., et al. A nationally representative case-control study of smoking and death in India. New England Journal of
Medicine, 2008; 358: 1137-47. Personal communication with Prabhat Jha, March 26, 2010.4
Bangladesh National Census, Bangladesh Bureau of Statistics, 2001.5
World Health Organization, Global Adult Tobacco Survey: Bangladesh Report, 2009.6 ITC Project. ITC Bangladesh National Report. University of Waterloo, Waterloo, Ontario, Canada; University of
Dhaka, Bangladesh, April 2010.
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Inpart,thelowimpactoftheTCAinfailingtoreducetobaccoconsumptionandprevalenceinBangladeshmaybeduetolowlevelsofenforcementofnontaxmeasuresoftheTCA,
such as the advertising ban and smokefree public places, and relatively low levels ofimplementationofwarninglabels(which,inaccordancewiththemorerecentArticle11
Guidelines,shouldincludegraphicimagesratherthanthecurrenttextonlywarnings).Butweknowthatthemostimportantandpotentiallyeffectivepolicyforreducingtobacco
consumption and prevalence is to set tobacco taxes at a sufficiently high rate and to
harmonizethetaxratesacrosstobaccoproducts.Inthisreport,wedescribefindingsfromourrecentInternationalTobaccoControlPolicyEvaluation(ITC)SurveyinBangladeshthat
demonstratetheurgentneedtotakeactioninthedomainoftaxation.
Bangladeshhasampleroomtoraisetobaccotax
ThecurrentcigarettetaxinBangladeshiscomposedoftwocomponents:avalueaddedtax(VAT) at the rate of15%,and a supplementary duty (SD) that varies atdifferent price
rangesofcigarettesper10sticks,withtherategoingupfrom32%atthelowestpricetierof 7.258.75 Taka, to 52% for 16.2517.25 Taka, to 55% for 23.2529.25 Taka, to a
maximumof57%forpricesabove46.25Taka.7AccordingtotheITCBangladeshSurvey,
conducted in 2009, 13.4% of our nationally representative sample of 2,788 cigarettesmokers purchases cigarettes in the lowest price tier, a majority (71.8%) purchase
cigarettesinthesecondlowesttier,11.0%inthethirdlowesttier,and3.8%inthehighesttier. Based on this distribution of cigarette smokers within each of the price tiers, the
weightedaverageofcigarettetaxratesincludingSDis49.8%.Theweightedaverageofthe
totaltaxrateincludingSD(49.8%)andVAT(15%)is72.3%. 8Weightedaveragepriceofa
packof10sticksofcigarettesis18.15Taka,accordingtotheITCdata.Thetotaltaxthusaccountsfor42%ofthesaleprice.9Thisshareoftaxinsalepricefallsonthelowersideoftheglobalscalerangingfrom0to80%andwellbelowtheWorldBankrecommendationto
settherateattwothirdsofthesalepriceataminimum.10
Table 1 presents the calculations based on ITC data on the impact of increases in
supplementarydutyonthetotaltaxrate,averagesalepriceperpack,increaseinsaleprice,
and the tax percentageof the saleprice, According toour calculations, bringing the taxpercentageuptotheWorldBankrecommendedlevelof67%forcigaretteswouldrequire
anincreaseoftheSDof225%fromitscurrent49.8%to161.9%.
7NationalBoardofRevenue,GovernmentofBangladesh,ValueAddedTax,GeneralOrderNo.10/VAT/2009,11June2009.8(1+0.0498)(1+0.15)1=0.723.9Pretaxprice(exfactoryprice+markupatwholesaleandretaillevel)=18.15/(1+0.723)=10.53Taka.
Amountoftaxperpack=18.1510.53=7.62Taka.Percentageoftaxinsaleprice=(7.62/18.15)x100=42%.10CurbingtheEpidemic:GovernmentsandtheEconomicsofTobaccoControl,TheWorldBank,Washington
D.C.,1999,p.45.
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Table1:Projectionoftaxandpriceincreasesforcigarettesandbidis
IncreaseinSD
over2009
(%)
SD
(%)
VAT
(%)
Totaltax
rate
(%)
Averagesale
priceper
pack(Taka)
Increasein
saleprice
(%)
Taxas
percentageof
saleprice(%)
CIGARETTES0 49.8 15 72.3 18.15 0 42.0
50 74.8 15 101.0 21.16 16.6 50.2
100 99.7 15 129.6 24.18 33.3 56.5
150 124.6 15 158.3 27.20 49.9 61.3
200 149.5 15 187.0 30.22 66.5 65.2
225 161.9 15 201.3 31.73 70.8 66.7(WorldBank
recommendedlevel)
250 174.4 15 215.6 33.24 83.2 68.3
300 199.4 15 244.3 36.26 99.8 71.0
350 224.3 15 272.9 39.27 116.4 73.2
400 249.2 15 301.6 42.29 133.1 75.1
BIDIS
0 20 15 38.0 6.00 0 27.5
50 30 15 49.5 6.50 8.33 33.1
100 40 15 61.0 7.00 16.67 37.9
150 50 15 72.5 7.50 25.00 42.0
200 60 15 84.0 8.00 33.33 45.7
250 70 15 95.5 8.50 41.67 48.8
300 80 15 107.0 9.00 50.00 51.7
350 90 15 118.5 9.50 58.33 54.2
400 100 15 130.0 10.00 66.67 56.5450 110 15 141.5 10.50 75.00 58.6
500 120 15 153.0 11.00 83.33 60.5
550 130 15 164.5 11.50 91.67 62.2
600 140 15 176.0 12.00 100.00 63.8
650 150 15 187.5 12.50 108.33 65.2
700 160 15 199.0 13.00 116.67 66.6(WorldBank
recommendedlevel)
750 170 15 210.5 13.50 125.00 68.0
Notes: 1.Totaltaxrate=[(1+SD/100)(1+VAT/100)1]x100
2.Percentageoftaxinsaleprice=(Taxperpack/Averagesalepriceperpack)x100,where:Taxperpack=AveragesalepriceperpackPretaxprice
Pretaxprice(exfactoryprice+markupatwholesaleandretaillevel)=
Averagesalepriceperpack/(1+Totaltaxrate/100).
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In case of bidis, currently, an SD at the rate of 20%is added to theVATof 15%.11 The
currenteffective tax rateofbidis isthus38%.12 According toITCdata, the averagesalepriceofapackof25bidisticksis6Taka,ofwhich27.5%istax.13Becausethecurrenttax
rateforbidisissolow,itwouldtakeamuchgreaterproportionalincreaseinSDtoachievetheWorldBankrecommendedtaxpercentageof67%.Specifically,asshownatthebottom
ofTable1,theSDwouldneedtoberaisedby700%fromitscurrent20%to160%.ItfollowsfromthisanalysisthatBangladeshhasampleroomtoraisethetaxrateforboth
cigarettes and bidis. It also shows that to bring the tax rate for bidis up to the same
recommended percentage of sales pricewill require a substantially greater proportionincreaseintaxes.
RaisingtobaccotaxescaneffectivelyreducetobaccouseinBangladesh
Intheprevioussection,wedemonstratedhowthetaxratesoncigarettesandbidismustbe
increasedinordertoconformtotheWorldBankrecommendedtaxlevelsoftwothirdsofthe sale price. In this section, we analyze the implications of taxes in decreasing both
consumption and prevalence of tobacco use in Bangladesh. How would consumers inBangladeshrespondtochangesinthepriceoftobacco?
Inorder to estimate the responsiveness of tobacco consumption to changes inpriceof
tobacco it is necessary to calculate three parameters: (1) elasticity of smoking
participation,(2)conditionalpriceelasticity,and(3)totalpriceelasticity,wherethethirdis a sum of the first two parameters. Specifically, the price elasticity of smoking
participation represents the impact of a price change on the prevalence of smokingresultingfromcessation,lesserrateofinitiationanduptakeofsmoking,andlesserrateof
relapseofquitters.Theconditionalpriceelasticitymeasurestheresponsivenessoftobaccoconsumptiontopricechangeforthosewhosmoke.Totalpriceelasticityisasumofthesetwoandindicatestheoverallimpactofapricechangeontobaccoconsumptionresulting
fromlowersmokingprevalenceaswellaslowersmokingintensityofexistingsmokers.
Pricesensitivityofcigaretteconsumption
Mostestimatesofpriceelasticityofcigarettedemandinlowandmiddleincomecountries
rangefrom0.5to1.0whilethoseforhighincomecountriestendtofallintherangefrom
0.25to0.5.14UsingITCBangladeshenumerationandwave1surveydata,weestimatetheelasticityofparticipationincigarettesmokingat0.29,theconditionalpriceelasticityof
11
NationalBoardofRevenue,GovernmentofBangladesh,ValueAddedTax,GeneralOrderNo.11/VAT/2009,11June2009.12(1+0.20)(1+0.15)1=0.38.13Pretaxprice(exfactoryprice+markupatwholesaleandretaillevel)=6/(1+0.275)=4.35Taka.Amount
oftaxperpack=64.35=1.65Taka.Percentageoftaxinsaleprice=(1.65/6)x100=27.5%.14
Chaloupka, F. J., Hu, T., Warner, K.E., Jacobs, R., and Yurekli, A. (2000). The taxation of tobacco products. In
Tobacco Control in Developing Countries (ed. P. Jha and F.J. Chaloupka), pp. 237-72, Oxford: Oxford University
Press.
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cigaretteconsumptionat 0.14,andthe totalpriceelasticityof cigaretteconsumptionat
0.43 (Table 2). This estimateofprice elasticityofcigarette demand is low compared tootherlowincomecountriesintheworld.15Onecanreasonablyarguethatitisthelowsale
priceofcigarettesthatmakesitsoaffordableforcigarettesmokerstobehighlysensitivetopricechangeswithinacloserangeoftheirpurchaseprice.Thevariationofpricewithina
crosssectionofpopulation,therefore,maynotbelargeenoughtoresultinalargedegreeof price sensitivity. We can expect to obtain a larger estimate of price elasticity withlongitudinalobservationsandlargervariationofpriceovertime.
Table2:PriceelasticityofdemandforcigarettesandbidisinBangladesh,2009
Cigarette Bidi
Smokingprevalence(%)(exclusiveanddualusers) 18.7 12.4
Smokingparticipation:Logitcoefficientonprice 0.45***(0.06)
0.53*(0.31)
Elasticityofsmokingparticipation 0.29 0.46
Numberofobservations 43,075 83,356
Priceelasticityoftobaccodemandconditionalonsmoking
participation
0.14***
(0.04)
0.18
(0.12)
Numberofobservations 1,850 597
Totalpriceelasticity 0.43 0.64
Source:ITCBangladeshEnumerationandSurvey,2009.
1. Cigarettedemandfunctionisestimatedusingtheadultmalepopulationofthemainsample.2. Bididemandfunctionisestimatedusingtheadultmaleandfemalepopulationofthemain,tribaland
floatingsample.
3. ***,**,and*implysignificantlydifferentfromzeroatthe1%,5%and10%levelsrespectively.4. Standarderrorsareprovidedintheparenthesesbelowtheestimates.Theseareadjustedfor
clusteredsamplingdesignofITCBangladeshenumerationandsurvey.
15One reason for such a low value of elasticity could be the endogeneity of self-reported cigarette pricethat can bias the price coefficient in the demand equation downward. It can happen when smokers choose
the particular brand of cigarette for its price so that they can smoke some chosen number of sticks per
day. In our survey, 55% of cigarette smokers mentioned that they chose the brand they regularly smoke
for its price, among other things such as taste, quality, perceived health effect, and popularity. However,
the Hausman specification test between ordinary least squares estimate using self-reported price and two-
stage least squares estimate using predicted price from first stage estimation does not support the
contention that self-reported price is endogenous.
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Thefindings ofprice elasticityofdemand forcigarettes have important implicationsfor
publichealth.Forasmoker,positivehealthbenefitsarerealizedtoa(much)greaterextentfor quitting than for reducing consumption. And thus, the proportion of the totalprice
elasticitythatisaccountedforbyelasticityofparticipationisrelevanttoanunderstandingoftheimpactofincreasingpriceonquitting.TheWorldBanktreatisefindsthatoverallfor
highincomecountries,theproportionofthetotalpriceelasticitythatisaccountedforbyelasticityofparticipationisabout50%.FromouranalysisofITCBangladeshSurveydata,theproportionis.29/.43=67%.Thus,iftaxeswereincreasedoncigarettesinBangladesh,
therewouldbegreaterimpactonreducingtheprevalencerate(leadingtogreatergainsin
enhancinghealthatthepopulationlevel)thanwouldbethecaseinmostothercountries.
Pricesensitivityofbidiconsumption
Using ITC data, we estimate the elasticity of participation in bidi smoking at 0.46,
conditionalpriceelasticityofbidi consumptionat 0.18 and totalprice elasticityofbidiconsumptionat0.64(Table1).Theconditionalelasticityisnotstatisticallysignificant.The
lowconditionalelasticityimpliesthatbidismokerswhocontinuetosmokeareexpectedtobe relatively unresponsive to price increases in terms of reduction of their currentconsumption. The estimate of participation elasticity for bidis is, however, statistically
significantandhigherthanthatofcigarettedemand.Thisisbecausebidisareconsumedmostlybylowerincomesmokerswhoalsotendtobemorepricesensitive(showninalater
sectioninthisreport).Thisresultindicatesthatanincreaseinbiditaxeswouldbemore
effective in reducing bidi consumption by reducing prevalence. The proportion of totalpriceelasticityduetoelasticityofparticipationis .46 / .64=72%,higherthanthe67%
foundearlierforcigarettes.
Thus,increasingtaxesonbidiswouldhaveagreaterimpactonreducingconsumptionand
agreaterproportionalimpactonreducingprevalence,relativeto thesameproportionalincreaseintaxesoncigarettes.
Effectofpriceincreaseoncigaretteandbidiconsumption
To further explicate the beneficial impact of tax increases on cigarettes and bidis, weprovideanextended exampleof the impact of increasing specific taxesoncigarettesby
50%and increasing specific taxesonbidisby50%.Based on the existing cigarette taxstructure, weestimate that a 50% increase in the supplementaryduty on domestically
manufactured cigarettes at each price tier would raise cigarette prices by 16.6% on
average.Totaltaxwouldaccountfor50.2%ofaveragesalepriceperpackofcigarette.Itis
assumedthattheincidenceofthistaxincreaseisfullypassedontothesmokersandthemarkupovertheexfactorypriceatthewholesaleandretaillevelsisunaltered.Giventheabove estimates of price elasticity of cigarette demand it can be shown that this 50%
increaseinsupplementarydutyonfactorymadecigaretteswouldresultina4.8%(0.29x
16.6%)decrease incigarettesmokingprevalence and 2.3% (0.14x 16.6%)decrease indaily cigarette consumption of those who continue to smoke. The total effect is thus
estimatedat7.1%decreaseinannualcigaretteconsumption.
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Thisanalysismeansthatincreasingthesupplementarydutyofcigarettesby50%ateach
pricetierwouldleadtoadecreaseof856,000cigarettesmokersfromthecurrentpoolof20.9millionsmokers, ofwhom17.9millionare cigarette smokers(including thosewho
smoke both cigarette and bidi). Furthermore, the current volume of annual cigaretteconsumptionof6,534millionpacksof10cigaretteswoulddecreaseby466millionpacks,
from the drop incigarette smoking prevalence aswell as the decrease incurrent dailyconsumptionofcigarettesbycontinuedsmokers.
Turningnowtobidis,a50%increaseinthesupplementarydutyondomesticallyproduced
bidisfromthecurrentrateof20%perpackof25sticksofbidiswouldincreasethesalepriceofbidis(whichsellsfor6Takaperpackonaverage)by8.3%,providedthatthistax
increasewouldbefullypassedontothesmokersandthemarkupatthewholesaleandretaillevelsovertheexfactorypriceremainsunchanged.Itwouldincreasetheshareoftax
inthesalespriceofbidisfrom27.5%to33.1%.Giventheaboveestimatesofpriceelasticity
ofbididemand,this50%increaseinsupplementarydutyonbidiswouldresultina3.8%(0.46x8.3%)decreaseinbidismokingprevalence.Althoughstatisticallyinsignificant,we
consider the effect of price increase on bidi consumption conditional on smokingparticipationtoestimatea1.5%(0.18x8.3%)decreaseindailyconsumptionofthosewhocontinuetosmokebidis.Thetotaleffectisthusestimatedat5.3%decreaseinannualbidi
consumption.
This analysis means that a 50% increase in the supplementary duty on domestically
producedbidiswouldleadtoadecreaseof456,000bidismokersfromthecurrentpoolof20.9millionsmokersofwhom11.9millionarebidismokers(includingthosewhosmoke
bothcigaretteandbidis).Furthermore,thecurrentvolumeofannualbidiconsumptionof2,379millionpacksof25bidiswouldbelessenedby127millionpacks,fromthedropin
bidi prevalence as well as the cut in current daily consumption of bidis by continued
smokers.
We set this extended example at a relatively low ratewhich would increase the tax
percentage of totalpriceupto50.1% for cigarettes, and 33.2% for bidis, far below theWorldBankrecommendationof67%.Still,suchanincreaseintaxes,thoughmodest,would
represent an important first step inanoverall longterm strategyof increasing taxationthatwouldeventuallybringthetaxationratesuptothatrecommendedlevel.Weoutline
suchastrategylaterinthispaper.
The effects on cigarette and bidi consumption corresponding to different percentage
increasesinspecifictaxes(supplementaryduty)arepresentedinTable3.
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Table3:Projectedeffectoftaxandpriceincreaseoncigaretteandbidiconsumption
inBangladesh
IncreaseinSD
over2009 SD(%)
Increasein
saleprice(%)
Decreasein
numberof
smokers
Decreaseintotal
consumption
(Millionpacks)
CIGARETTES
0 49.8 0
50 74.8 16.6 856,096 466
100 99.7 33.3 1,712,191 932
150 124.6 49.9 2,568,287 1,399
200 149.5 66.5 3,424,382 1,865
250 174.4 83.2 4,280,478 2,331
300 199.4 99.8 5,136,574 2,797
350 224.3 116.4 5,992,669 3,263400 249.2 133.1 6,848,765 3,729
450 274.1 149.7 7,704,860 4,196
500 299.1 166.3 8,560,956 4,662
550 324.0 182.9 9,417,052 5,128
BIDIS
0 20 0
50 30 8.33 456,250 127
100 40 16.67 912,500 254
150 50 25.00 1,368,750 381
200 60 33.33 1,825,000 508
250 70 41.67 2,281,250 634
300 80 50.00 2,737,500 761
350 90 58.33 3,193,750 888
400 100 66.67 3,650,000 1,015
450 110 75.00 4,106,250 1,142
500 120 83.33 4,562,500 1,269
550 130 91.67 5,018,750 1,396
600 140 100.00 5,475,000 1,523
650 150 108.33 5,931,250 1,650
700 160 116.67 6,387,500 1,776
Notes: 1. Decreaseinnumberofsmokers=IncreaseinsalepricexPriceelasticityofcigarettesmoking
participationxEstimatednumberofsmokersin2009.
2. Decreaseintotalconsumption=Increaseinsalepricex(Priceelasticityofsmokingparticipation+
Priceelasticityofconsumptionconditionalonparticipation)xEstimatedtotalconsumptionin
2009
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Dualusageofcigarettesandbidis
Theanalysisaboveconsidersthepriceresponsivenessofcigarettesandbidisindependentof each other. However, a large portion of the smokers are observed to smoke both
cigarettesandbidis.IntheITCdata,thesedualusersaccountfor9.3%oftheenumeratedpopulationrepresenting8.8millionsmokersofthenationalpopulation.Moreover,halfofthe cigarette smokersand threefourthsof the bidi smokers are dual smokers, and that
about half of the smokers in Bangladesh frequently switch between cigarette and bidi
consumption.Hence,demandforcigarettesisnotindependentofdemandforbidisandtheseparate equations estimated for cigarette and bidi consumptionmay bias the results.
Considering this interdependence, we estimate a single demand function for bothcigarettesandbidis.
Inthisfunction,weconsiderdualsmokersasbidismokersastheirdailysmokingintensityisgreaterinbidiconsumption.Theaveragedailybidiconsumptionofdualsmokersis13.9
sticks,while their averagedaily cigarette consumption is5.8sticks.Hence,weusetheirreportednumberofbidismokedperdayalongwiththenumberofbidissmokedperdayfor exclusive bidi smokers and the number of cigarettes smoked per day for exclusive
cigarettesmokersasthedependentvariable.Similarly,theirreportedpriceofbidisisusedasanindependentvariablealongwiththepriceofbidisforexclusivebidismokersandthe
priceofcigarettesforexclusivecigarettesmokers.
Theelasticityofparticipationinsmokingcigarettesorbidisisestimatedtobe0.34,and
the elasticity of conditional demand for cigarette or bidi is 0.12. Thus the total priceelasticityofdemandforcigarettesandbidisisestimatedat0.46.Thegreaterelasticityof
overall smoking participation compared to cigarette use is driven by the much greater
elasticityofparticipationofbidismokers,asshownintheprevioussectionsoncigaretteandbididemandequationsestimatedseparately.
Our finding about the large scale usage of both cigarettes and bidis suggests that thepotentialofswitchingbetweenthesetwoproductsishighintheaftermathofchangesin
theirrelativeprices.Smokersderivingsatisfactionfromeithercigaretteorbidismoking,whichever iseconomicalatthe pointofpurchase, are expected tobepersistent intheir
smoking habit and hence less likely to quit or to reduce their consumption. This
compensatingbehaviorofsmokersislikelytodampentheintendedeffectofataxincreaseandthusunderminethepublichealthgoalsoftobaccocontrol.
Inviewof thepossibilityofproductswitching inresponseto relative pricechanges,theprojectionoftheeffectofataxincreaseonsmokingprevalenceandtobaccoconsumptionis
notasstraightforwardasitwasincaseofindependentestimationforcigarettesandbidis.Itisnecessarytoaccountforthepotentialofproductswitchinginestimatingtheeffecton
priceincreasesontheprobabilityofsmokingbyanindividualaswellashis/hersmoking
intensity.Moreover,itislikelythatsmokersswitchtocheapercigarettebrandsinthefaceof rising expenditureand thus are able tomaintain their current smoking participation
withequalintensity.
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Inordertoidentifyindividualswhoswitchoverproductsorbrandsofthesameproducttomaintaintheirsmokinghabit,weneedtoobservetheirtobaccoproductpurchasepattern
overtime.Thecrosssectionalstudiesontobaccodemandarelimitedbythelackof theselongitudinal data for a particular society. The ITC Bangladesh Survey, however, is a
longitudinalcohort survey,anduponcompletionofsecondwave (2010)and thirdwave(2011) surveys, we will be able to investigate this important aspect of tobaccoconsumptionbehavioramongthecohortofsmokersinBangladeshandwillthusbeableto
estimatetheimpactofincreasedtobaccotaxesontobaccouseinamoreprecisemanner.
Harmonizationoftaxacrosscigarettesandbidis
Comparing the independent estimates of price sensitivity for cigarette and bidi
consumption,wefindthattheabsolutedecreaseinbidiconsumptionaftera50%increase
in supplementary duty on bidis would be much less than in the case of cigaretteconsumption,despitelargerestimatesofpriceelasticityforbidiconsumption.Thisisdue
tothefactthattheproportionoftaxinthesalespriceofbidisis27.5%comparedto42%for cigarettes. It indicates that tobring forthcomparabledecrease incigarette and bidiconsumption, the supplementary duty on bidi should be brought at par with that on
cigarettesintermsofthepercentofsaleprice.Itisonlythenthattheuniformpercentageincreasein the ad valorem tax rates, suchassupplementaryduty,across cigarettes and
bidiswouldnotincreasetherelativepriceofcigarettesinfavorofbidismokingandwould
bringdownbothcigaretteandbidiconsumptionsimultaneously.
Theharmonizationoftaxisofgreatimportancefortheeffectiveimplementationoftobaccotaxation. The dual usage of cigarettes and bidis and the habit of product switching by
smokers,asmentionedintheprevioussection,isenhancedbythelargetaxdifferentialthat
existsbetweencigaretteandbidiinBangladesh.Itappearstobeamajorweaknessinthepresenttobaccotaxstructurein Bangladesh.Asmentionedearlierin thisreport, thetax
rateappliedtobidismustbeincreasedatafargreaterratethanthatofcigaretteforthe
convergenceofpercentageshareoftaxinsalepriceforthesetwoproducts650%forbidiand200%forcigarettesforthissharetobeabouttwothirdsofsalepriceofeitherproduct.
Atthatpoint,theSDratewouldbeabout150%.
Itshouldalsobepointedout thattheaveragepriceofbidis(6Taka)isveryclose tothe
lowestpricetierofcigarettes(7.25to8.75Taka)specifiedintheprogressivetaxstructurefor cigarettes. The continuity of price level from bidis to cheaper brands of cigarettes
potentiallycontributes to thefrequent switchingofdual smokersbetweencigarette and
bidi.Inthesecircumstances,increasingthecigarettetaxrateatthelowesttierwouldmakethe corresponding brands relatively expensive and make the smokers of these brands
switch to bidis in greater proportions, undercutting their probability of quitting orloweringtheirsmokingintensity.Thustherewouldbenopublichealthgain.Itmighteven
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result in further loss of welfare as bidis are found to be more harmful to health than
cigarettes.16
TheGovernmentofBangladeshcansubstantiallyincreasetaxrevenueby
raisingtobaccotaxes
Theinelasticdemandforcigarettesandbidis(elasticityislessthan1)suggeststhatagivenincreaseintobaccopriceswouldleadtoalessthanproportionatedecreaseinconsumption
leadingtoanincreaseintobaccoexpenditureofsmokersandtherebygeneratinggreatertaxrevenue.HencetheGovernmentwouldgainsignificantlyfromataxincreasethatraises
theprice.Accordingtoourestimation,aninitial50%increaseinSDineachoftheprice
tierswouldresultin16.8%increaseincigarettetaxrevenuefromdomesticallyproducedcigarettes.This increase corresponds toan increaseof845croreTaka to the estimated
currentlevelofcigarettetaxrevenueof5,021croreTaka.17
Figure 1 shows the annual level of cigarette tax revenue corresponding to percentageincreases in SD at successively higher rate beginning from the current state to 550%increase.Theprojectionrevealsthatthereisa limittotheexpansionoftaxrevenuefrom
increasing tobacco taxes. The tax revenuefromraising cigarette taxmay increase upto
350% increaseintax rate.For further increaseintax ratebeyond 350%of the currentlevel,revenuestartstofall,althoughitwillcontinuetobehigherthanthecurrentlevelof
collectionforsomerangeoftaxincrease.Ourcalculationshowsthatcigarettetaxrevenue
ismaximizedwhentherateofSDis224%.IncludingtheVAT,thetotaltaxratewouldbe273%and the totaltaxwould represent73.2%ofthesalesprice.Thiswouldresult ina
116%increaseinthesalepriceofcigarettesthatis,amorethandoublingofthesalepricefromthecurrentlevel.Themaximumtaxrevenueisprojectedtobealmosttwiceashighas
thecurrentlevel.Thelimittotheincreaseintaxrevenuefromincreasedtaxratesisposedbythecontraction
of the size of the market from falling smoking prevalence that causes tobaccomanufacturerstocutdownproduction.Thefallintaxrevenuefromlowerproductionlevel
in turn outweighs the increased tax collection from the continued smokers. Thus the
demand reduction strategy of raising tobacco tax has proved to be very effective inreducingtobaccoproductioncomparedtosupplysidedisincentives.
Atthispointofmaximizationoftaxrevenue,thenumberofsmokerswillalsodecreasebyabout6million,andcigaretteconsumptionwillbelowerby3,263millionpacks(Table3).
16
Prakash C. Gupta, Mangesh S. Pednekar, D.M. Parkin, and R. Sankaranarayanan, Tobacco associated mortalityin Mumbai (Bombay) India. Results of the Bombay Cohort Study, International Journal of Epidemiology, 2005;
34: 13951402.
17 1 crore = 10 million.
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Figure1:Annualcigarettetaxrevenue(CroreTaka)fromgivenpercentageincrease
insupplementarydutyfrom2009rate
Source:ITCBangladeshEnumerationandSurvey,2009.
Inotherwords,thecalculationsusingdatafromtheITCBangladeshSurveydemonstratethat increasing the total tax rate to the pointwhere cigarette tax revenueismaximized
wouldalsoleadtoadecreaseof6millionsmokers.Thisisacompletewinwinsituation.
In the sameway,weproject that for price elasticity ofdemand for bidis inBangladeshestimatedinthisstudy,a50%increaseintheexistingSDonbidiswouldleadtoa23.4%
increaseinbiditaxrevenuefromtheexistingestimatedlevelof395croreTaka.Usingthesamemethodasincaseofcigarettetaxrevenue,wemeasurethattaxrevenuefrombidican
bemaximizedatalevelof834croreTakaifSDisincreasedby500%withincreaseinsalepriceofbidiby83.3%.Itwouldresultin4.6millionlessbidismokersand1,269million
lessofbidipacksconsumed(Table3).
As shown inTable 1, the shareof tax corresponding to themaximumbidi tax revenue
(500%increaseinSD)is60.5%,whichislowerthantherecommendedproportionof67%.Incontrast, for cigarettes, the shareof tax correspondingto themaximumcigarette tax
revenue (350% increase in SD) is 73.2%, which is higher than the recommendedproportion.Thiscontrastpointstothefactthatthelimittotheexpansionofrevenuefromtaxing bidis is reachedearlier than that from taxing cigarettes.This occurs because the
smokingprevalenceofbidismokersismoresensitivetopriceincreasessothatthenumber
ofcontinuingbidismokersistoolowtobeabletosustaintherisingtrendintotalrevenuecollection by paying larger amount of tax. This point is further elaborated in the next
section.
5021
5866
6972
7850
85118970
92399330925890358673
8186
0% 50% 100% 150% 200% 250% 300% 350% 400% 450% 500% 550%
Cigare'etaxrevenue(croreT
aka)
%increaseinsupplementaryduty
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Tobaccotaxationandthepoor
Itiswidelyrecognizedthatthepoorerpeoplearemoresensitivetopricechangesthanthe
richer,becausetheopportunitycostofagivenincreaseinexpenditureisgreaterforthepoor.ThispredictionisconfirmedintheITCBangladeshSurvey.Usinghousingindexfor
stratificationofrespondentsintolow,medium,andhighsocioeconomicstatus(SES),weestimategreatersensitivityofthelowerSESpeoplewithrespecttoincreasesinpricesas
reflectedinthetotalpriceelasticityfiguresinthebottomrowofTable4forcigarettesand
bidis. The inverserelationshipofpriceresponsivenesswithSES isdrivenmostly bythegreaterlikelihoodthatpoorpeoplewillquitorabstainfromsmoking,atthesametimeas
they aremore likely tobesmokers inthe firstplace. It isreflected intheir larger price
elasticityof smokingparticipationvisvistheirgreatersmokingprevalenceasshowninTable4.
The price elasticity of cigarette consumption conditional on participation is, however,
insignificant for the low SES and greater among themedium SES than the high SES. It
indicatesthatthoselowSESsmokerswhocontinuetosmokearethemostaddictedandareinsensitive toprice increases.A similarpatternisobserved forbidi smokingprevalence
and daily consumption. Between the moderate and high SES smokers, however, the
conditionalelasticityofbidiconsumptionisgreateramongthehighSESsmokers.
Thecomparisonofpriceelasticitiesbetweencigarettesandbidisfurtherreflectsthatbidismokersaremorepricesensitivethancigarettesmokers.Thisdifferenceisexplainedby
thelargepricedifferentialbetweencigarettesandbidisthatmakebidismoreaffordableto
smokersatlowerSESwhoarealsomorepricesensitive.Moreover,bidismokersatthelowSESdemonstrateexceptionalpricesensitivitytheirdemandforbidisispriceelastic(total
priceelasticityisgreaterthan1).Theirelasticdemandismostlyexplainedbytheirhigh
probabilityofquittingorabstentionfromsmokinginthefaceofapriceincrease(elasticityofsmokingparticipationis0.90).
Asaresultofhavingthehighestpriceresponsivenessofsmokingprevalence,peoplefrom
thelowSESasapopulationgroupwouldbenefitmostfromincreasedtaxandpricesintwo
ways. First, increasedtax/pricewould lead toarelativelygreaterproportionof lowSESsmokers who would quit smoking altogether, thereby reducing the likelihood of the
adversehealthoutcomeofsmoking.Second,agreaterproportionoftheresourcesthatlowSESsmokersspendontobaccowouldbefreedupforpossibleuseinproductiveandmore
beneficialpurposes.
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Table4:PriceelasticityofdemandforcigarettesandbidisinBangladeshbysocio-economicstatus,2009
Cigarette Bidi
Low Moderate High Low Moderate HighSmokingprevalence
(%)(exclusive&dualusers)
45.6 38.1 30.1 19.1 11.9 4.1
Smokingparticipation:
Logitcoefficientonprice0.63***(0.14)
0.43**(0.16)
0.21***(0.05)
1.11***(0.40)
0.88*(0.47)
0.07(0.37)
Elasticityofsmoking
participation0.33 0.27 0.14 0.90 0.77 0.07
Numberofobservations 13,930 15,303 13,842 29,574 28,936 24,846Priceelasticityoftobacco
demandconditionalon
smokingparticipation
0.10(0.08)
0.12**(0.05)
0.10*(0.05)
0.28(0.14)
0.14**(0.309)
0.37***(0.08)
Numberofobservations 573 563 714 309 209 79Totalpriceelasticity 0.43 0.39 0.24 1.18 0.91 0.44
Source:ITCBangladeshEnumerationandSurvey,2009.
1. Cigarettedemandfunctionisestimatedusingtheadultmalepopulationofthemainsample.2. Bididemandfunctionisestimatedusingtheadultmaleandfemalepopulationofthemain,tribaland
floatingsample.
3. Low,mediumandhighsocioeconomicstatusareassignedbytertilesofCASHPORhousingindex.4. ***,**,and*implysignificantlydifferentfromzeroatthe1%,5%and10%levelsrespectively.5. Standarderrorsareprovidedintheparenthesesbelowtheestimates.Theseareadjustedfor
clusteredsamplingdesignofITCBangladeshsurvey.
DiscussionFromthe analysisofWave1 ofthe ITCBangladeshSurvey,weconclude that increasing
tobaccotaxescansignificantlyreduceconsumptionofcigarettesandbidisthroughreducedsmoking prevalence aswell as lower smoking intensity of continued smokers.We also
showthatraisingtaxratecanincreasetobaccotaxrevenuetoalargeextent.Inorderto
make maximum revenue gain from tobacco taxation, the government can increasesupplementarydutyoncigarettesby350% andonbidiby500% thatwouldmorethan
doublethecigarettepriceandnearlydoublebidiprice.
Doublingthepricelevelsofcigaretteandbidiatatimemayseemadrasticsteponthepart
ofthegovernment.Inabsoluteterms,itmeansthatapackofcigarettethatcosts18Takanowwillsellfor36Takaandapackofbidisthatcosts6Takanowwillcost12Takaafter
increasingSDtotherevenuemaximizinglevel.Thisincreaseincigaretteandbidipricescan
barelyoffsetthemorethantwofoldincreaseintheiraffordabilityoverthepastoneandahalfdecades.IndeedtheITCBangladeshSurveyfoundthatonly4.7%ofsmokersagreed
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that in the last 6months there was a time when the money they spent on cigarettes
resultedinnothavingenoughmoneyforhouseholdessentialslikefood.Althougheconomicallyviable,therearelimitsontheextenttowhichtobaccopricescanbe
increased;asuddenlargeincreaseintobaccopricemaynotbepoliticallyfeasible.Becauseofthispoliticalchallenge,itisadvisabletoimplementthisincreaseintaxrateinphases,
whichwouldallowareasonabletimeperiodforconcernedconsumersandproducerstoadjusttotheoverallprice/taxincrease.Onepossiblestrategywouldbefortobaccotaxestobeindexedtoinflationandeconomicgrowthinamannerthattherealpricewouldincrease
by at least 10% every year. This would and keeps pace with growth in income and
purchasingpowerofpeople.Byimplementingthisstrategy,itwouldtakeabout10yearstoachievetherealincreaseinpriceadoublingofthecurrentrealprice.
TheimportanceofswitchingfromAdValoremtaxestoSpecifictaxes
Thebestmethodforreducingtobaccoconsumptionandprevalencethroughtaxationisforthattaxtobespecifictounitsofconsumption(e.g.,perunit(stick,pack,weightoftobacco)
ofcigarettesorbidis).Specifictaxescanbeusedtoservethedualpurposeofexpandingrevenue and discouraging consumption of the taxed commodity. Because specific taxesfocusonthequantityof theproductratherthanonthevalueofconsumption,specifictax
acts as a disincentive to consume tobacco in general across all price tiers and socioeconomicstatusofusers.Specifictaxesareuniversallyacknowledgedbyeconomiststobe
more effective than an ad valorem tax, such as VAT and SD, which is imposed as a
percentageofprice.
ThecurrenttobaccotaxesinBangladeshareadvaloremtype,whichisknowntoencouragesmokers to switch to lowerpriced products rather than toquit.Bangladesh isone ofa
handfulofcountriesintheAsianregion(includingCambodia,Thailand,andVietnam)that
levyadvaloremtaxesontobacco.Incontrast,18countriesintheregionlevyspecifictaxeson cigarettes: Australia, Brunei, Hong Kong, India, Korea, Japan, Laos,Macau, Maldives,
Mongolia,Nepal,NewZealand,PapuaNewGuinea,Philippines,Singapore,SouthKorea,Sri
Lanka,andTaiwan.Fourcountriesuseamixedsystemofspecificandadvaloremtaxes:China,Indonesia,Malaysia,andPakistan.Indonesiaintroducedspecifictaxinadditionto
existingadvaloremtaxfromJuly2007. 18ItistimeforthegovernmentofBangladeshtotailoritstaxadministrationforthetransitionfromadvaloremtospecificexcisetaxationof
tobacco.
For generating the amount of revenue from cigarette and bidi taxes in Bangladesh
equivalent to the maximum revenue calculated for increased SD, as discussed in the
sectionsabove,thespecifictaxshouldbeabout20Takaonapackof10cigarettesticksandabout6Takaonapackof25bidisticks.Toimplementthesetaxesovera10yearperiod
18FordetailsonthetobaccotaxstructureinAsianregion,seeEmilM.Sunley,TobaccoExciseTaxationinAsia:RecentTrendsandDevelopments,apaperpreparedfortheFourthMeetingoftheAsiaTaxForum,
April1820,2007,Hanoi,Vietnam.
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wouldimplyaddingtaxof2Taka(in2009prices)perpackofcigaretteand0.60Taka(in
2009prices)perpackofbidieveryyear.
The immediate need isto forcetobaccoproductsoutofthepurchasingpowerofpeoplewithintheexistingrubricoftobaccotaxation.Thelongtermtargetmustbesetatmoving
from ad valorem to specific taxation and collapsing the differential tax rates betweencigaretteandbidi,aswellasacrosscigarettesatdifferentpricetiers,intoauniformrate.
Thispolicyprescriptionmayseemunfairtopeopleatthelowerstrataofsocioeconomic
status because the tax burden would be disproportionately larger for those who usecheapertobaccoproducts.Thusthespecifictaxisregressiveinnature.However,itcanbe
assertedthatraisingtobaccotaxesisoneofthoserarepolicymeasuresthatcanserveboththepurposesofequityandefficiency.Ourfindingssuggestthatthepoorerpeoplearemore
responsive to price increases and hence tax increases will reduce their tobacco
consumptiontoagreaterextent.Consequently,largerhealthgainswillbeexperiencedbythis segment of the population, which will contribute to a reduction in the health and
economicdisparitythatcurrentlyexistsinBangladesh.Overandabovethepublichealthgain,thelimitedresourcesofthepoorthatusedtobespentontobaccoconsumptionwillbedivertedfromaddictivetoproductiveusestothebettermentofsocioeconomicwelfare
ofthepoor.Thereisnoalternativetoincreasingtaxesontobaccoproductsinachievingthesegoals.
The rationale of increasing tobacco taxes is generally challenged by the followingrepercussionsanticipatedintheaftermath:
Lossofgovernmentrevenuefromtobaccoexcisetaxation Anunfairlyhightaxburdenonthepoor Increasedsmugglingoftobaccoproductsintothecountry Joblossesintobaccocultivationsector,tobaccoproductmanufacturingsector,and
theadvertisingsectorandmedia
Lossoftobaccoindustrysponsorshipofsportingandculturalevents
Thefirsttwoissueshavebeenaddressedinthepresentanalysis.Itshowsthatgovernment
does not need to fear the loss of revenue from tobacco taxation until the tax rate isincreasedbyasignificantamountandtobaccoconsumptionfallstoasufficientlylowlevel.
Furthermore,thisanalysisshowsthatthepooraremorepriceresponsivethantherichso
thatagivenpriceincreaseislikelytoshifttheburdenofincreasedtaxesfromthepoortotherich.Thedemandanalysispresentedherecannotaddresstheotherthreeissuesonits
own.Itneedstobesupplementedwiththeanalysisofdataonsmuggling,employmentand
the activities of tobacco industries,whichare subject to further explorationof ITC dataalongwithgovernmentandtobaccoindustrydocuments.
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PolicyRecommendationsforTobaccoTaxationinBangladesh
BasedonaneconomicanalysisoftheITCBangladeshSurveydata,thefollowingtobacco
taxationstrategyisrecommended:
1. Inordertomaximizerevenuegainfromtobaccotaxation,thegovernmentshouldincreasesupplementarydutyoncigarettesby350%andonbidiby500%inthelongrun.Theseincreaseswouldmorethandoublethecigarettepriceandnearlydouble
thebidiprice.Whilethisincreaseseemsdrastic,itwouldbarelyoffsetthemorethantwofold increase in the affordability of cigarettes and bidis over the past two
decades.
2. Itisadvisabletoimplementthisincreaseintaxrateinphasestoallowreasonabletimeforconcernedconsumersandproducerstoadjustforthepriceincrease.For
example,tobaccotaxshouldbeindexedtotheinflationandeconomicgrowthsothatthe real price increases by at least 10% everyyear above the inflation rate and
keeps pace with growth in income and purchasing power of people. This
incrementalstrategywouldtakeabout10yearsforthesalespricetodoubleabovethebenchmarklevel.
3. ItistimeforthegovernmentofBangladeshtotailoritstaxadministrationforthetransition fromad valoremtospecificexcise taxationoftobacco.The specifictax
shouldbeabout20Takaonapackof10cigarettesticksandabout6Takaonapack
of 25 bidi sticks. To implement these taxes over a 10year period would implyaddingtaxof2Taka(in2009prices)perpackofcigaretteand0.60Taka(in2009
prices)perpackofbidiseveryyear.
The longterm target must be set at moving from ad valorem to specific taxation and
collapsingthedifferentialtaxratesbetweencigarettesandbidis,aswellasacrossbrandsof
cigarettesatdifferentpricetiers,intoauniformrate.
Conclusion
Opponentsoftobaccotaxincreasesarguethatsuchincreaseswillresultinasignificantlossof government revenue and impose anunfairly high tax burden on the poor.Economic
analysesoftheITCBangladeshSurveyWave1resultsshowthatthegovernmentdoesnot
needtofearthelossofrevenueuntilthetaxrateisincreasedbyasignificantamountandtobacco consumption falls to a sufficiently low level. The ITC Bangladesh findings are
consistentwithauniversalfindingineconomicstudiesoftobaccouse:thatthepoorare
morepriceresponsivethantherich.Ataxincreaseismorelikelytoreducetheirtobaccoconsumption, resulting in larger health gains and therefore lowerhealth and economic
disparityinsociety.Inthismanner,thelimitedresourcesofthepoorwillbedivertedfromaddictivetoproductiveuses,improvingthesocioeconomicwelfareofthepoor.
In other words: significant increases in tobaccospecific taxes will both increasegovernment revenue and reduce the consumption of tobacco aswell as the number of
peoplewhousetobacco.
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APPENDIX
EconometricModelofPriceElasticityofDemandforCigaretteandBidi
In the first stage we calculate the elasticity of tobacco use conditional on smoking from the
following equation estimated by Ordinary Least Squares (OLS) method using wave -1 surveydata:
C = a0 + a1 P + a2 I.Edu + a3 Married + a4 I.Village/Ward + a4 Addict + e2
where a1 = Conditional price elasticity for smokers.C = Log of the number of whole cigarettes smoked daily
P = Log of reported price of tobacco products per stickEdu = An index of education
Married = Dummy variable for marital status = 1 if married and 0 otherwiseVillage/Ward = An index of area of residence (village/ward)
Addict = Addiction variable corresponding to the number of years of smoking.
Next we estimate the following equation for smoking participation (prevalence), where the
probability of smoking is a function of price P. We calculate these probabilities using the logitmodel:
P(Smoking) = [1+ebo+b1P]
1
The elasticity of participation is then calculated as follows:b = b1(1 Proportion of smokers) = price elasticity of smoking participation.
We estimate this equation using the census data. Since the census data contains no price
information we first estimate the following price equation for both smokers and nonsmokers
from wave-1 survey data:
P = c0 + c1Age + c2I.Upazila + c3Urban + c5I.SES + e1
where Age = Age of the respondent
Upazila = An index of Area (upazila)Urban = Dummy variable for place of residence = 1 if urban and 0 if rural
SES = Housing index for socio-economic status
The non-smokers did not report any price for tobacco products and it is assumed that they facethe same product prices as smokers who are otherwise similar with respect to observable
characteristics such as, age, socio-economic status and area of residence. We estimate thecoefficients for the price equation from the survey data and then use the estimated coefficients
into the census data to calculate predicted price P for both smokers and nonsmokers. We use
this price P to estimate the elasticity of participation. The total price elasticity is calculated as:
= b + a1
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We then repeat the procedure for each of the three levels of socio-economic statuslow,medium, and highto see how the responsiveness to a price change varies across different
income groups.
One criticism that is often raised in the context of the estimation of demand equation is that price
is an endogenous variable, and hence the coefficients estimated in the consumption equation arebiased. We conducted a Hausman test in order to detect whether the reported price deviated fromwhat would be expected if it was exogenous. The Hausman test compares the OLS estimate of
the demand equation under the assumption that price is exogenous and the two-stage least square(2SLS) estimate of the demand equation with price predicted from instrumental variable
estimation. The Hausman test failed to demonstrate that the price variable was not exogenous inall the equations.
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Australia
Baladesh
Bhuta
Brazil
Caada
Chia (Mailad)
Frace
germay
Idia
Irelad
Malaysia
Mauritius
Mexico
netherlads
new Zealad
South korea
Thailad
Uited kidom
Uruuay
Uited States of America
20 countries 50% of the worlds population60% of the worlds smokers 70% of the worlds tobacco users
The International Tobacco Control Policy Evaluation Project
The ITC ProjectEvaluating the Impact of FCTC Policies in...
Geoffrey T. Fong, Ph.D.
Department of Psychology
University of Waterloo
200 University Avenue West
Waterloo, Ontario N2L 3G1 Canada
Email: [email protected]
Tel: +1 519-888-4567 ext. 33597
www.itcproject.org
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