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Experts Demands Increased Taxes on Tobacco in Next Budget

The use of tobacco causes an annual economic burden of Rs. 615 billion, which is 1.6 percent of Pakistan’s GDP, while the revenue generated from the tobacco industry is only Rs. 120 billion. This gap between expenditure and revenues can be bridged by the government increasing taxes on tobacco products.

This was the crux of an online discussion that was organized by the Society for the Protection of the Rights of the Child (SPARC) to stress the need for increased taxation on tobacco products to provide the required relief to Pakistan’s struggling economy.

The panelists discussed the harmful effects of smoking on the economy and urged the government to increase the taxes on cigarettes and tobacco products in the next federal budget, which has been stagnant for the last three years.

The Country Head of the Campaign for Tobacco Free Kids (CTFK), Malik Imran Ahmed, highlighted that the use of tobacco causes a yearly economic burden of Rs. 615 billion, which is 1.6 percent of the GDP, although the revenue generated from the tobacco industry is Rs. 120 billion. He mentioned that it is astonishing that while the prices of all the essential items have risen exponentially over the last three years and the tobacco industry keeps benefitting from the relaxed taxation policy.

As tobacco products are a source of damage, the industry should pay for the loss instead of others, Ahmed remarked.

Program Manager SPARC, Khalil Ahmed Dogar, said that Pakistan should look to tap into revenue generation opportunities and consider reducing avoidable costs to sail through the current economic situation. Both these can be done with a single decision — increase the taxation on tobacco products.

He stated that the number of smokers in Pakistan had reached 29 million, many of whom have developed cancer, diabetes, heart diseases, stroke, and chronic lung diseases. Tobacco products are collectively responsible for almost 68 percent of all the deaths in Pakistan, as 170,000 people die every year, which means 466 people die every day because of tobacco use. Such hazardous items should be heavily taxed to keep them out of the reach of lower-income groups and children. However, tobacco products in Pakistan are being sold at lower rates compared to other countries in the region.

Dogar added that children in Pakistan are being targeted by the tobacco industry to recruit them as ‘replacement smokers.’ Around 1,200 Pakistani children between the ages of 6-15 start smoking every day, and increasing tobacco taxes will reduce this number.

CEO Chromatic Trust, Shariq Mahmood Khan, said that imposing higher tobacco taxes will help Pakistan improve its international standing. The World Health Organization (WHO) has repeatedly recommended that Pakistan should increase the Federal Excise Duty (FED) on tobacco products by 30 percent. Tobacco taxes are the most cost-effective tobacco control measure, and evidence suggests that higher cigarette taxes deter smoking initiation, reduce cigarette consumption, and even lead smokers to quit.  Overall, this is a golden opportunity for the government to generate revenue, provide a remedy to the people, and increase Pakistan’s international prestige, Khan remarked.

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Published by
Faiz Paracha