Islamabad: Tobacco control activists demand that the government increase the Fed on tobacco products, including smokeless tobacco products, in Pakistan. There are currently two control plates for cigarettes. Cigarettes costing less than Rs 90 per pack and cigarettes costing Rs 90 or more are charged at Rs 33 FED. However, these taxes are still below the standard of the World Health Organization (WHO) Framework Convention on Tobacco Control (FCTC), which Pakistan has signed since 2005. According to the FCTC, signatories must impose an optimal tax of 75% on the retail price of cigarette packs. Pakistan has not yet reached this standard. They called for a federal excise tax (FED) increase of at least 30% on each plate of cigarettes to improve revenues and reduce tobacco use, especially among teenagers.
Mr Waseem, Center for Social Policy and Development (SPDC), said the excise tax in Pakistan is still under 90 billion. FBR achieved it in 2015-2016. The rate of excise duty on cigarettes has not changed since June 2019, but cigarette prices have increased. The main cause of the rise in cigarette prices in 2019 was not the excise tax. This was due to an increase in the after-tax price. The excessive shift in taxes on prices serves a dual purpose. It increases the profit per pack of the industry and the industry is taking advantage of this price increase to avoid a tax hike in the tax rate for 2020. The loss of revenue for the government due to underreporting in 2017 and 2018 was Rs 35 billion and Rs 15 billion, respectively. Based on the above finding, we would recommend increasing the excise tax rate for 2021-2022.
Abid Sulehri, executive director of the Sustainable Policy Development Institute (SDPI), said the government was still facing a financial crisis due to the Covid-19 pandemic. He added that the total economic cost of smoking in Pakistan was estimated at 143 billion rupees in 2012. This includes direct healthcare costs and costs due to lost productivity, according to a 2018 report titled Global Economic of Smoking-Attributable Diseases. He added that the government needs to increase the current tobacco products FED to at least 30% to adjust inflation rates in the upcoming budget. This will increase government revenue that can flow into government health and education program initiatives.
Senator Ayesha Raza Farooq said that tobacco use is the leading cause of preventable deaths worldwide, according to the World Health Organization. The exposure to tobacco use is increasingly greatest in low and middle income countries targeted by the tobacco industry with its lethal products and misleading marketing practices. She said that increasing taxes on tobacco products was a proven effective measure to control and reduce the consumption of tobacco products. She also showed her support for increasing taxes on tobacco products, including the FED and health levy, with regular adjustments to inflation rates to make them less accessible to the youth.
Tobacco control activists urge the Honorable Pakistani Prime Minister Imran Khan to address the issue of tobacco use in Pakistan and to raise taxes, including the FED and health levy, on tobacco products to save our youth from the threat.