Only 218 of 483 zarda-gul factories, pay taxes: Study

Speakers at a webinar said a significant number of chewing or smokeless tobacco (SLT) manufacturers in Bangladesh have managed to slip away from the government's tax net.

''Among the 483 SLT factories (435 zarda and 48 gul factories) in Bangladesh, only 218 pay taxes,'' according to a study's findings revealed at the webinar.

The webinar was jointly organized on Monday by a number of anti-tobacco organisations, including the National Heart Foundation, Dhaka Ahsania Mission, UBINIG, Voice, and PROGGA, said a press release.

The findings of the study were presented by Dr Nasiruddin Ahmed, leader of the research team and former Chairman of the National Board of Revenue (NBR).

With assistance from Campaign for Tobacco Free Kids (CTFK), the study, ''Factors Inhibiting Smokeless Tobacco Tax Payments by Smokeless Tobacco Manufacturers Operating Outside the Tax Net in Bangladesh,'' was conducted to find out why and how SLT manufacturers escape the tax net.

The study was done in 88 SLT manufacturers who are out of the tax net (81 zarda and 7 Gul), spanning over 29 districts of the country's 08 administrative divisions. 

Md Mustafizur Rahman, lead policy advisor of CTFK, Bangladesh and former chairman of Bangladesh Chemical Industries Corporation (BCIC), delivered a welcome speech.

Addressing the event, NBR member (VAT Audit and Intelligence) Zakia Sultana said, "SLT use should be reined in for the sake of revenues and public health. Reducing SLT use would also reduce health sector expenditures."

The 'informal' nature of SLT production is the main impediment to ensuring tax compliance in this sector, speakers said.  

The study also revealed that 33 percent of them do not even have a valid trade license, and 91 percent of manufacturers produce SLT products manually.

It also shows that SLT products are manufactured primarily in small unmarked factories or houses. The total monthly gross turnover is estimated to be Tk2.7 crore.

A number of other NBR issues, including lack of trained officials, organisational structure of field offices, and outdated equipment and systems also add to this problem, the study reports.

 A wide range of senior NBR officials, leaders of anti- tobacco organizations, and experts including CTFK Research Director Maria G Carmona, CTFK South Asia Programs Director Vandana Shah, participated in the discussion session. 

The study recommends with a view to safeguarding public health and increasing revenue collection, a reform of the SLT tax structure.

Moreover, the price difference between different SLT products should be reduced to curb affordability.

The study also recommends introducing an automated tax return processing system, equipping and training NBR personnel, restructuring NBR field formations, introducing a secure tracking and tracing system (TTS), authorizing local government institutions to bring SLT manufacturers under local tax nets, and not bestowing awards on SLT manufacturers.

Among Bangladeshi adults (15 yrs old and above), 20.6 percent (22 million in number) use smokeless tobacco. Among students, 13-15 years old, the prevalence of SLT use is 4.5 percent, it added.

SLTs are severely detrimental to health and responsible for causing oral, oropharyngeal, and other types of cancers.

Despite such high use of smokeless tobacco, in Fiscal Year 2019-20, the SLT sector barely contributed Tk30.6 crore as revenue, only 0.12 percent of total tobacco revenue collected that year.