Govt urged to increase tobacco tax by 40 pc to generate revenue, reduce consumption

Govt urged to increase tobacco tax by 40 pc to generate revenue

ISLAMABAD, May 28 (DNA): The health advocates have urged the government to increase tax on tobacco products by 40 percent to generate revenue, decrease consumption and bridging the gap in health costs associated with smoking.

It should be mentioned here the proposed increase would result into a substantial rise in government revenue, estimated to reach Rs 336 billion from the current Rs 240 billion. The intervention would also significantly impact health costs associated with smoking, projected to be reduced from Rs 615 billion to Rs 418.2 billion, effectively reducing the gap between revenue and health costs to Rs 82 billion.

Former caretaker minister for information and broadcasting, Mr. Murtaza Solangi stated that all stakeholders must cast their differences aside and unite to protect our children and youth from an industry which is causing billions of losses to the national exchequer. He said that increasing tobacco taxes was such a step which should be regularly implemented. The low cigarette prices are the reason why children and young people initiate smoking, he added

Solangi further stated that smoking-related illnesses and deaths incur substantial economic costs in Pakistan’s GDP every year. These increasing health cost burdens encompass healthcare expenses, productivity losses due to illness and premature death, as well as other indirect economic impacts, he noted.

Country Head Campaign for Tobacco Free Kids (CTFK), Malik Imran Ahmad said that the effectiveness of high tobacco taxation as a vital measure in combating tobacco consumption, as advocated by the World Health Organization (WHO). The industry can absorb at least a 40% increase in taxes, and the IMF and World Bank have recommended Pakistan introduce a single-tier tax structure for cigarettes.

He said that despite efforts to increase taxes, low cigarette prices persist, contributing to sustained high consumption levels. By adopting these reforms, Pakistan can make cigarette taxation more effective and align it more closely with international best practices, he maintained.

He further stated that the cigarette prices in Pakistan were still cheaper than in many parts of the world.

Malik Imran said that the illicit market share is exaggerated by multinational companies. The industry has been found to underreport production to evade taxes, violating tax laws and prioritizing profits over public health.

Managing Director of the Social Policy and Development Centre (SPDC), Muhammad Asif Iqbal said that smokers’ response to price changes suggests an enormous potential for taxation to discourage smoking in Pakistan. As a result of the recent hike in the FED on cigarettes and the corresponding increase in prices, cigarette consumption has declined by 19.2%, he added.