In an effort to reduce tobacco consumption in Pakistan and increase revenue for the government as well as bridge the gap in health benefits associated with the use of tobacco, health advocates have proposed a 40 percent tax increase on tobacco products.
As a result of this proposal, an estimated Rs336 billion will be generated for the government from Rs240 billion at the moment, resulting in a significant increase in revenues. In addition to reducing health costs associated with smoking, the intervention will help reduce the revenue gap between revenue and costs associated with smoking by Rs82 billion, effectively reducing the gap between revenue and health costs from Rs615 billion to Rs418.2 billion.
The former caretaker minister of Information and Broadcasting in the Pakistani government, Murtaza Solangi, has stressed that all stake-holders must put aside their differences in order to work together to protect our children and youth from an industry that is causing billions of dollars to be lost to the national economy. Tobacco taxes should be raised on a regular basis, which is one of those steps that should be taken regularly.
A low price for cigarettes is one of the reasons why children and young people start smoking so early in their lives. A considerable amount of money is spent each year by Pakistan in relation to tobacco-related illnesses and deaths as well as the country’s GDP, according to the adviser. There is an increase in health costs that include both monetary costs related to health care and productivity losses as a result of illness or premature death in addition to other indirect economic effects.
In an interview with CTFK, Malik Imran Ahmad, Country Head, mentioned that the World Health Organization (WHO) was looking for high tobacco taxes to fight tobacco consumption, in other words they are advocating high tobacco taxes as a vital measure to help reduce the number of smokers around the world. It has been suggested by the IMF and the World Bank that Pakistan introduce a single-tier tax structure for cigarettes, as the industry is capable of absorbing at least a 40% increase in taxes.
Despite the government’s efforts to raise taxes, cigarette prices remain low in spite of the efforts to increase them, resulting in sustained high consumption rates. It is believed that Pakistan will be able to effectively tax cigarettes by implementing these reforms and by aligning it closer to international best practices as well. According to him, cigarette prices in Pakistan will always remain lower than they are in many other countries around the world due to the low cost of labor.
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