Activists Demand Further Increase in Excise Duty on Cigarettes

Health activists and civil society organizations demanded of the government to further increase taxes on cigarettes in the coming budget (2023-24).

They added that taxation is a key revenue source for any government and taxing non-essential items such as tobacco leads not only to a cut in budget deficit but also in the expenditure on diseases.

According to a statement of Sanaullah Ghumman, from PANAH, the NGO has long been advocating to discourage smoking in society as it causes diseases. He has stated that the government has to impose taxes on cigarettes on a regular basis as per recommendations of the World Health Organization (WHO).

Malik Imran, Country Head of Campaign for tobacco-free kids (CTFK), has mentioned that due to the government’s decision of increasing Federal Excise Duty (FED) on cigarettes in February 2023, an additional Rs. 11.3 billion FED revenue was obtained in the fiscal year 2022-23 which is an increase of 9.7 percent from the previous year.

Furthermore, an additional Rs. 4.4 billion in VAT revenue was obtained in the fiscal year 2022-23 which is an increase of 11.5 percent from the previous year. This additional Rs. 15.7 billion revenue makes up 0.201 percent of GDP which is a significant boost for a struggling economy like Pakistan, he said.

Imran mentioned that these self-explanatory figures reveal that increased taxation is beneficial for the economy but the tobacco industry misleads everyone by crying the illicit trade excuse. Imran added that the blown-up figure of illicit trade is used to divert people from underreporting.

These companies underreport their production and then sell their non-reported products in the illicit market, causing billions of losses to the national exchequer.

Dr. Ziauddin Islam, a retired government employee, has said that tobacco is the largest silent killer in Pakistan as above 170,000 people die due to tobacco use each year. This pandemic also causes an annual economic burden of 615 billion which is 1.6 percent of Pakistan’s GDP. He explained that increased prices bring a decrease in production and consumption which decreases the health cost burden.

According to the estimates, there has been a 31.7 percent decline in declared production of cigarettes in the fiscal year 2022-23 compared to the previous year. Learning from this example, which is also recommended by World Health Organization, Pakistan should increase taxes at regular intervals so that inflation and per capita income are accounted for and Pakistanis remain protected from the harms of tobacco products.

Khalil Ahmed Dogar, Program Manager SPARC said that the children of Pakistan are being targeted by the tobacco industry so that “replacement smokers” could be recruited. Around 1200 Pakistani children between the ages of 6-15 years start smoking every day. He mentioned that on average Pakistani smokers spend 10 percent of their monthly income on cigarettes. Therefore increased prices remain the most effective tool in keeping these killer products away from the spending power of children and low-income groups.

Khalil added that all stakeholders must cast their differences aside and unite to protect our children and youth from the harms of tobacco. Increasing tobacco taxes is such a step that should be regularly implemented.

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