Call for 40pc tobacco taxes hike to curb health costs, boost revenue 

Call for 40pc tobacco taxes hike to curb health costs, boost revenue 

ISLAMABAD: In a bid to curtail tobacco consumption, boost revenue, and offset health expenses linked to smoking, health advocates in Pakistan have suggested a substantial 40pc rise in taxes on tobacco products.

They argue that if implemented, this proposed increase could boost government revenue from the current Rs240 billion to an estimated Rs336 billion. They anticipate that the step will markedly diminish health costs associated with smoking, projected to decrease from Rs615 billion to Rs418.2 billion. This reduction, if materialized, would effectively narrow the gap between revenue and health expenses to Rs82 billion.

Murtaza Solangi, former federal caretaker minister of information, called for collective action by stakeholders to save the children and youth from an industry that incurs substantial losses to the national treasury, seeking regular implementation of measures such as increasing tobacco taxes.

Attributing the initiation of smoking among children and young people to low cigarette prices, Mr. Solangi highlighted the economic toll of smoking-related illnesses and deaths on Pakistan's GDP each year. These costs encompass healthcare expenditures, productivity losses due to illness and premature mortality, as well as other indirect economic ramifications.

Malik Imran Ahmad, Country Head of Campaign for Tobacco-Free Kids (CTFK), underscored the effectiveness of high tobacco taxation as endorsed by the World Health Organization (WHO). Ahmad noted that the industry could accommodate at least a 40pc tax hike, echoing recommendations from the IMF and World Bank for Pakistan to adopt a single-tier tax structure for cigarettes.

Ahmad also criticized multinational companies for inflating the illicit market share, alleging that they underreport production to evade taxes, thereby flouting tax regulations and prioritizing profits over public health concerns.

Muhammad Asif Iqbal, Managing Director of the Social Policy and Development Centre (SPDC), highlighted smokers' responsiveness to price changes, suggesting significant potential for taxation to discourage smoking. He cited a recent 19.2pc decline in cigarette consumption following a Federal Excise Duty (FED) hike and subsequent price increase.

Citing preliminary findings from a nationwide survey of over 5,000 smokers conducted by SPDC, he said that although the sale of loose cigarettes is prohibited by law, 35pc of smokers reported purchasing loose cigarettes. This ratio in urban areas is 44pc, compared to rural regions where it is 31pc.