Volume 6, Issue 12, December – 2021 International Journal of Innovative Science and Research Technology

ISSN No:-2456-2165

Tobacco Consumption in Bangladesh:

An Analysis on Multiple Variables
Dr. Mostofa Mahmud Hasan BM Sajjad Hossain
Department of Business Administration Research Scholar, Faculty of Social Science
EXIM Bank Agricultural University Bangladesh University of Dhaka, Dhaka-1000, Bangladesh.

Abstract:- The World Health Organization [1] has Smoking cigarettes and bidis are really very common
estimated that more than eight million people died habits of all aged populations in Bangladesh. Not only that, a
worldwide every year from tobacco consumption. Most few hewing tobaccos like Zarda with betel quid or Gul are also
importantly, fifty percent of users died due to tobacco- commonly sold in Bangladeshi local markets, both in rural and
borne diseases and eighty percent of total users are from urban areas [3][4][5). The World Health Organization
lower-income countries. As part of fiscal policy, tax, as well analyzed the cost of tobacco consumption at the national level
as price increasing method, is considered the most effective and found it to be associated with increased healthcare costs,
way to reduce cigarette consumption in any nation. The loss of productivity due to illnesses and early deaths, and
Government of Bangladesh has tried to reduce tobacco environmental pollution [6].
consumption without hampering revenue collection from
tobacco tax. Consequently, the strategic decision had been The cheap and availability of tobacco products at any
taken to balance between those two factions over the years. place are the main cause of a huge number of consumers in
In this paper, all the data had been collected from Bangladesh. Nonetheless, the lack of strong tobacco control
secondary sources. A regression analysis had been regulations and weak enforcement of the existing regulations
conducted in the research to find out the relation between made the situation worse. The Global Adult Tobacco Survey
tobacco consumption with tobacco tax and education rate. conducted by WHO had reported that Bangladesh is one of the
It had been found that a higher tax rate and increased top ten countries in the world with high tobacco use (both
education rate had a negative impact on tobacco smoking and smokeless forms) with a prevalence of 43.3
consumption tendency in the context of Bangladesh. percent among adults where 1.5 percent of women engaged in
smoking [7].
Keywords:- Tobacco Consumption; Tobacco Tax in
Bangladesh; Education Rate; Tobacco Items; Health Tobacco is not only a harmful consumption item for
Hazards. human health but also a financial burden for a nation. A lot of
people die from tobacco-related illnesses every year around
I. INTRODUCTION the globe [8]. Both smoking tobacco (popular at a young age)
and smokeless tobacco (popular in middle age) create various
The tobacco industry in Bangladesh has passed its serious types of health hazards and environmental pollution.
glorious period since 1971 when the production of tobacco has
increased gradually. Between the years 1971 and 2010, the The government of Bangladesh has imposed a high level
total production of cigarettes has increased by 2.2 times while of taxes on tobacco products with an aim to reduce the
per capita availability of cigarettes has increased by 25 consumption tendency. As the education rate is increasing, the
percent. The share of GDP value of tobacco manufacturing habit of tobacco consumption would be reduced. An educated
compared to other sectors has increased from 5.44 percent in person bewares of the bad impact of tobacco use on health
1997 to 6.39 percent in 2010. Trends of the last three decades which may lead to a negative impression of tobacco
show that the share of gross value added by tobacco consumption. However, this paper has attempted to analyze
manufacturing has increased by 30 percent [2]. the relationship between tobacco consumption rate with
education rate and tax rate.
Bangladesh has been ranked as one of the top countries
around the world in terms of inflation rate which ranges II. LITERATURE REVIEW
between 7 to 9 percent. But compared to tobacco with our
necessity goods, tobacco is more expensive than many other [9] It had been observed that a decline in bidi (low-grade
necessity goods. Even cheap cigarette is expensive when cigarette) consumption can potentially contribute to the
compared to the many basic food items. The reality is that the growth in cigarette consumption through migration bidi to
price of a Gold leaf (most popular and well-branded) cigarette cigarette smoking habits by the new smokers. A sizable
is higher than the price of an egg. A pack of the Gold leaf is number of smokers use both cigarettes and bidi which has led
quite good enough that would be paid for two dozen eggs, for to exclusive cigarette smokers numbers. Based on this
three dozen small bananas, or for a liter of soybean oil (an research, it had been revealed that the number of exclusive
essential item for cooking). cigarette smokers increased by 2.7 million between 2009 and
2017 [10].

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Volume 6, Issue 12, December – 2021 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
The researchers had discovered that tax earnings from C. Dependent variable
cigarettes is high but achievement in the healthcare sector is Smoking rate (15+) was used as dependent variable for
negligible that might be gained from reduction in cigarette this study.
consumption in Bangladesh. The research had observed the
change in overall tax structure and changes in cigarette taxes D. Independent Variable
and prices. It studied the consumption of different tobacco Education rate and tax on tobacco were used as
products between the years 2009 and 2017 after examining independent variables.
both the demand and supply-side factors in the cigarette
market in Bangladesh. E. Multiple Linear Regression
The multiple linear regression model is applied to
Tax structure in Bangladesh had been studied [11] and determine the relationship between a dependent variable and
found multi-tiered complex excise. The research had found one or more independent variables. The general form of the
that the complexity of the cigarette market is different and the regression model is
widening price differential among brands is mainly 𝑦 = 𝛽0 + 𝛽1 𝑥1 + 𝛽2 𝑥2 + 𝛽3 𝑥3 + … + 𝛽𝑘 𝑥𝑘 + 𝜀 (1)
responsible for this. Demand for cigarettes has been increasing
in the last few years due to this market structure with respect Where 𝑦 the dependent is variable, 𝛽0 is the intercept,
to price, quality, and branding. x1 to xk are the independent variables, β1 to βk is the change
in 𝑦 for each one increment change in the independent
British American Tobacco recognized the role of volume variables, and ɛ is the disturbances. Therefore, the ordinary
growth in spurring higher portability, alongside the least square fitted model from (1) is given by
contributions of the better brand mix, price increases by
𝑦̂ = 𝛽̂0 + 𝛽̂1 𝑥1 + 𝛽̂2 𝑥2
government order, cost savings, and productivity growth.
British American Tobacco from cigarette sales 121% higher
𝑦̂is the predicted value of the dependent variable𝑦, 𝛽̂0 is
compared between 2009 and 2016, from 3.84 to 8.47 billion
BDT in between 2009 and 2018 prices [12]. Research had been the intercept, x1 to x2 are the independent variables, 𝛽̂1 𝑡𝑜 𝛽̂2
associated and from there it had been suggested that an is the estimated value of β1 to β2.
increase in the affaffordability of cigarettes relative to bidis has
driven this migration of bidi smokers to cigarettes [13]. Since the variables are measured in different units, so we
used standardized partial regression coefficients which is
Tobacco is one of the leading causes of disability and measured by
death around the globe. Over a million pounds of toxic 𝑠𝑘
chemicals are released by tobacco products. [14] It had been 𝛽̂𝑘 =
studied to explore the effects of tobacco toxicants on human 𝑠𝑦
health and environmental pollution. The study had assessed
the knowledge about toxicant content in tobacco and the health Where, 𝑠𝑘 is the standard deviation of the
and environmental hazards of tobacco use. k’th independent variable and 𝑠𝑦 is the standard deviation of
the dependent variable.
A few researches have been found on the tobacco
industry that discussed consumption rate with its related other IV. RESULTS AND DISCUSSION
factors. Mostly are about the consumer categories, user
preference, market share, probability of the firms, brand There are numerous macroeconomic variables that affect
available in the market, etc. This paper has found this gap and Smoking rate. Here, we used some selected variables which
conducted a regression analysis of tobacco consumption rate are given in table 1. Where it is observed that with the passes
with education rate and tobacco tax rate settled by the of the year smoking rate is declining, on the contrary, tax rate
government. on tobacco increasing and education rate is increasing day by
day.
III. METHODOLOGY
A. Graphical Analysis
A. Data Source Figure 1 clearly demonstrate that throughout the
The researchers used secondary data related to this study considered period smoking rate curve has been declining, on
and data for the fiscal year 2007-08 to 2019-2020. the other hand, tax rate curve and education rate curve are in
upward move, implying that there exists a negative relation
B. Data Analysis Techniques between dependent and independent variables.
The secondary data has been analyzed in SPSS 16.00
version and descriptive statistics and multiple linear regression
was used to analyze the effect of the variables.

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Volume 6, Issue 12, December – 2021 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165

Smoking Tax Rate on Education In figure 2, it is observed that day by day tax rate is
Year increasing and smoking rate in decreasing.
Rate (15+) Tobacco Rate
80.00
2007-08 45.50 49.00 46.66
2008-09 45.00* 49.00 49.00* 70.00

2009-10 44.00* 49.00 52.00* 60.00

Smoking
2010-11 43.50 50.00 56.00* 50.00 Rate (15+)
*
2011-12 43.00 52.25 58.77 40.00
2012-13 42.30 53.75 57.86 30.00
2013-14 41.70* 53.75 61.02
20.00
2014-15 41.10 56.25 61.09 Eduacatio
*
10.00
2015-16 40.60 58.75 65.14 n Rate
0.00
2016-17 40.10 60.00 72.76
*
2017-18 39.60 61.25 72.89
2018-19 39.10 62.50 73.91
2019-20 38.00 *
62.50 74.68 Fig 3: Scatter plot of smoking Rate (15+) and education rate
Table 1: Smoking Rate (15+), tax rate on tobacco and in Bangladesh from 2007-08 to 2019-20
education rate in Bangladesh from 2007-08 to 2019-20 Source: Authors calculation from collected data
Source: [15] & [16] * used simple forecasting method
Figure 3 indicates that smoking rate gradually decreased
with increasing education rate.
80.00
70.00 Tax Rate on C. Correlation Analysis
Tobacco
60.00
50.00 Factors Pearson r
40.00 Tax rate on tobacco -0.973
30.00 Eduacation Education rate -0.975
Rate Table 2: Correlation of tax rate on tobacco and education
20.00
rate with smoking Rate (15+)
10.00
Source: Authors calculation from collected data
0.00
Smoking
2012-13

2019-20
2007-08
2008-09
2009-10
2010-11
2011-12

2013-14
2014-15
2015-16
2016-17
2017-18
2018-19

Rate (15+) Table 2 reveals that both tax rate on tobacco and
education rate are very close to perfect negatively correlated
with the dependent variable smoking rate. That is, with the
Fig 1: Scatter plot of smoking Rate (15+), tax rate on tobacco increasing of the tax rate on tobacco and education rate
and education rate in Bangladesh from 2007-08 to 2019-20 smoking rate decreases.
Source: Authors calculation from collected data
D. Multiple Linear Regression Model For Smoking Rate
70.00

60.00
Sources of F P
DF SS MS
Tax Rate on Variation value value
50.00 Regression 2 62.36 31.183 130.79 .000
Tobacco
40.00 5 4
Residual 10 2.384 .238
30.00
Total 12 64.74
20.00 9
10.00 Table 3: Testing overall significance of the regression model
Smoking Source: Authors calculation from collected data
0.00 Rate (15+)
2010-11

2014-15
2007-08
2008-09
2009-10

2011-12
2012-13
2013-14

2015-16
2016-17
2017-18
2018-19
2019-20

Table 3 explains that tax rate on tobacco and education

rate are jointly significant with smoking rate at 5% level of
significance.
Fig 2: Scatter plot of smoking Rate (15+) and tax rate on
tobacco in Bangladesh from 2007-08 to 2019-20
Source: Authors calculation from collected data

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Volume 6, Issue 12, December – 2021 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
95% CI
Sources of Variation Coefficients Std. Error t value P value
Lower Upper
Intercept 60.732 2.635 23.049 .000 54.861 66.603
Education Rate -.130 .060 -2.150 .057 -.265 .005
Tax rate on tobacco -.198 .110 -1.792 .103 -.443 .048
Table 4: Testing individual significance of the regression model
R = 0.981, R2 = 0.963 and R2adj = 0.956
Source: Authors calculation from collected data

From the table 4, the estimated model for Smoking Rate public vehicles. However, still, there is an option to increase
is, the tax rate on tobacco products, for both importation and
purchase. As education builds the nation by creating
̂ 𝑅𝑎𝑡𝑒 = 60.732 − .130𝐸𝑑𝑢𝑐𝑎𝑡𝑖𝑜𝑛 𝑅𝑎𝑡𝑒
𝑆𝑚𝑜𝑘𝑖𝑛𝑔 awareness. It is also found that a higher education rate has led
− 0.198𝑇𝑎𝑥 𝑅𝑎𝑡𝑒 𝑜𝑛 𝑇𝑜𝑏𝑎𝑐𝑐𝑜 to having a reduction in tobacco consumption in the context of
the Bangladeshi tobacco market. Threfore, we should be more
Education rate is negatively associated with Smoking tactful in setting policy to increase education rate as well as
rate and the coefficient -.130 indicates that one standard Cigarette tax rates should have been set at an optimal level to
deviation increase in education rate would lead to .130 help limit tobacco consumption.
standard deviation decrease in smoking rate.
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