The Social Policy and Development Center (SPDC), in cooperation with the Society for the Protection of the Rights of the Child (SPARC), organized a seminar here at the local hotel on the subject of “Implications of cigarette tax policy in Pakistan”.
ISLAMABAD, (UrduPoint / Pakistan Point News – August 5, 2021): The Center for Social Policy and Development (SPDC), in collaboration with the Society for the Protection of the Rights of the Child (SPARC), organized a seminar on the “Impact of the Cigarette Tax”. Politics in Pakistan “here at the local hotel.
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 policies on cigarette consumption, government revenues and health outcomes.
Speakers stressed that increasing the 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 WHO Framework Convention on Tobacco Control (FCTC) and generate much-needed revenue to reduce the budget deficit. In addition to tax measures, the 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.
As the main guest, Minister of State for Parliamentary Affairs Ali Muhammad Khan spoke about the government’s initiatives on tobacco control measures in the country. He said the government will take all necessary measures to ensure the implementation of all relevant cigarette tax increase laws in order to increase their revenues and reduce healthcare costs. Health is already the neglected sector in Pakistan. The generation of income, the reallocation of resources and the reformulation of the health strategy aimed at helping the disadvantaged groups more and improving the general health structure were the desired needs of the time. Better health policies with an emphasis on the implication side can greatly improve the standard of living of the unfortunate. He also confirmed that the government will overcome all challenges facing the major tobacco industry to protect Pakistani children from the effects of tobacco use.
Chief, Sales Tax & Federal Excise Policy, Federal Board of Revenue Girghari Mai Maghwar said the large fiscal imbalances in Pakistan require 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. He added that FBR’s focus is not only on generating income, but also on reducing tobacco use, and any government policy in this regard is greatly appreciated.
In his address to the participants, Malik Imran Ahmad, head of the country’s Tobacco Free Children Campaign (CTFK), said that the tobacco industry is having a strong negative impact on our economy. He stressed that it is not only industry that incurs enormous health care costs of 615 billion euros. Because of this expenditure, people have less money available for basic things such as health and education. He mentioned that increasing tobacco taxes is a proven win-win policy to not only reduce tobacco use, as recommended by WHO, but also to generate more income. Unfortunately, there has been no net tobacco tax hike for the past 4 years, which has made the tobacco tax in Pakistan one of the weakest in the world, making it inexpensive and affordable for the youth. He called on the government to adopt a comprehensive national tobacco control policy.
SPDC chief economist Muhammad Sabir stated that federal excise tax (FED) rates on cigarettes are very low in Pakistan. The average consumption tax share is only 45.4 percent of the retail price and is thus well below the widely accepted guideline value of 70 percent. He added that FED rates on cigarettes have not changed in the past two years and no increase has been introduced in the current 2021 Finance Act. As a result, cigarettes have become cheaper and more affordable. He went on to say that the policy of “inaction” would have a profound negative impact on tax revenues and health outcomes. 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% 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.
SPARC board member Khalida Ahmed highlighted the role of civil society in tobacco control, saying the biggest role that tobacco control activists play is the acceptance of tobacco use as a human rights issue. Through tireless advocacy, civil society has raised awareness that tobacco use is not just a health problem. It has serious implications for poverty and economic stability, child development, child rearing, and child labor in many cases; it also becomes a child protection issue.