Senate committee recommendations to increase tobacco tax
by Waqar Ali Shah
Mr. Sajjad
Ahmed Cheema, Executive Director, SPARC said that it is estimated that if the
government eliminates the lowest tax tier and brings the FED of the lower tier
to PKR 40, it would raise significant additional tobacco tax revenue of PKR
18.4 billion—a 20.9% increase from current tobacco tax revenue. As an added
advantage, it would reduce cigarette consumption by 12.6% and reduce the number
of smoking-related deaths among current and future smokers by 3.1% (a reduction
of about 0.35 million people every year). Considering the fact that increase in
dollar price has an effect of the increase in the price of basic goods for
living like fruits and vegetables etc, whereas on the other hand, the prices of
tobacco products are the same. We are still unable to get why this sector being
ignored for an imposition of taxes who has been contributing a lot to increase
the health cost and burden of diseases on our Nation. This has made cigarettes
and other tobacco products within the reach of the children buying power. We
urge the government to increase tobacco taxes and save our children.
Malik Imran Ahmad
from Campaign for Tobacco Free Kids, Pakistan office said Big Tobacco Industry
caused a whopping 153 Billion Rupees loss to the National exchequer between
2016-19, by being awarded low tax rate and adjusting the prices of their most
sold brands. Almost 90% of all brands consumed in Pakistan were taxed as “low”
tiers under the previous tax system (FY 2016-17). If their prices had remained
the same, most would have automatically been reclassified as “medium” (89% of
them). However, we find that Big Tobacco companies made deliberate adjustments
in prices resulted in a significant price reduction, causing in 88% of the
market being taxed at the new lowest rate in the current tax system. After the introduction of third tier, around
160 Billion cigarettes were produced between May, 2017 to March; 2019. Big
tobacco companies share 75% of the total market, which means they were able to
sell 120 billion cigarettes in the same period. Loss of Revenue due to
introduction of 3rd Tier (low tobacco taxes) is 77.85 billion rupees
from 2016 to 2019. Loss of Revenue due
to Price Adjustments is 75 billion rupees from 2018 to 2019.
Mr. Khalil Ahmad, Manager Research
and Communication, SPARC shared that Pakistan
is one of the fifteen countries worldwide with the heavy burden of tobacco
related ill health issues. Around 1000 to 1200 Pakistani children between ages
of 6-15 years start smoking every day according to the Global Adult Tobacco Survey (GATS) results of 2015.
Pakistan’s population consists of 60% youth below the age of 25 where alarming
statistics of young people getting addicted and at risk of tobacco consumption
calls for strict tax reforms and checks for selling cigarettes to the minors
particularly. The worrisome aspect is the healthcare burden, which is 143
billion compared to revenue generation, which only stands at 83 billion
currently, leading to loss to federal exchequer.
The speakers expressed
confidence that Senate committee recommendations to increase tobacco tax, if
adopted by the government will prove to be an effective policy that will
simplify Pakistan’s tobacco tax system, thus reduce government’s administrative
costs, improve enforcement and compliance and further align it with best global
practices. Furthermore, the recommendations can significantly reduce tobacco use and save lives
while raising significant additional tax revenue that can fund government
health programs, including tobacco control programs.