ISLAMABAD: Minister of State for Parliamentary Affairs Ali Mohammad Khan said Thursday the government would take all necessary measures to ensure the implementation of relevant laws to increase the cigarette tax.
Speaking to participants in a seminar entitled “Implications of Cigarette Tax Policy in Pakistan,” he said that health was already a neglected sector in Pakistan.
The event was organized by the Center for Social Policy and Development (SPDC) in collaboration with the Society for the Protection of the Rights of the Child (Sparc). The purpose of the seminar was to share the results of the SPDC’s recent research on tobacco taxation and to discuss the impact of tax policy on cigarette consumption, government revenues and health outcomes.
Mr. Khan confirmed that the government will meet all challenges facing the tobacco industry to protect Pakistani children from the effects of tobacco use.
Speakers highlighted that an increase in the federal excise tax (FED) rate would help the government meet its commitment to reducing tobacco use and tobacco-related morbidity, mortality and related economic costs. Such an increase would also advance Pakistan’s commitments as a signatory to the World Health Organization (WHO) Framework Convention on Tobacco Control (FCTC) and generate much-needed revenue to reduce the budget deficit. They said that in addition to tax measures, monitoring mechanisms and the enforcement of relevant laws should also be improved, including a track-and-trace system, as announced by the finance minister in his budget speech for 2021-22.
Girghari Mai Maghwar, chief of sales tax and federal excise tax policy for the Federal Board of Revenue (FBR), said in a statement that Pakistan’s large budget imbalances are requiring greater tax revenues. The tobacco tax can make a positive contribution to government revenues. FBR played a key role in the abolition of the third tier, which met the WHO requirements agreed by Pakistan.
In an address to the participants, Malik Imran Ahmad, Country Leader, Campaign for Tobacco-Free Kids (CTFK) said that the tobacco industry is having a grossly negative impact on our economy. He said the industry is not only placing a huge health care burden of Rs 615 billion on this already poor country, but is also directly affecting poor smokers, who spend 10 percent of their average monthly income on cigarettes. Because of this spending, people have less money to spend on basic things like health and education.
The increase in tobacco taxes is a proven win-win strategy to not only reduce tobacco consumption, as recommended by the WHO, but also to generate more income. Unfortunately, there has been no net increase in tobacco taxes in the past four years, making the tobacco tax in Pakistan one of the weakest in the world and making tobacco products cheap and affordable for the youth. He called on the government to adopt a comprehensive national tobacco control policy.
SDPC chief economist Mohammad Sabir said the Fed rates on cigarettes in Pakistan are very low.
“The average excise duty rate is only 45.4 percent of the retail price, much lower than the widely accepted guideline of 70 percent,” he said.
Presenting the results of the SPDC research, he stated that no change to the FED would result in 270,000 more smokers and 95,000 more adult smoking-related deaths in Pakistan for 2021-22, while revenues would increase slightly due to increased consumption. On the other hand, a 30 percent increase in the FED proposed by SPDC would result in additional income of 30 billion rupees, 220,000 fewer smokers and 77,000 lives saved.
Posted in Dawn, August 6, 2021