ISLAMABAD: The absence of a clear policy reforms on tobacco taxation for multinational cigarette manufacturing companies has caused an accumulative revenue loss of Rs 567 billion during past seven years.
Indus Broadcasting Corporation (IBC) has exposed the staggering loss to national exchequer in a policy paper titled, “Rethinking Tobacco Taxation in Pakistan: A Call for Immediate Reforms”.
The new study has quoted figures of Federal Board of Revenue (FBR) revenue targets from the cigarette industry and the tax collected in seven years.
The study revealed a substantial Rs 567 billion loss in the past seven years, emphasising the urgent need for policy reforms.
The IBC has recommended the government to align the tobacco taxation policy with the guidelines of the WHO and safeguard it from the industry’s influence. “Prioritize public health over industry interests, recognizing the health and economic burden of tobacco consumption,” the policy paper recommended.
The IBC has recommended to enforce stringent measures to prevent the cigarette industry’s interference, considering recommendations from global health organisations.
A recent study has proved that the consumption of cigarettes in Pakistan has decreased after the imposition of high taxes by the government.
“Federal Excise Duty (FED) on cigarettes, a major source of tobacco taxation, has been manipulated by powerful businesses to safeguard their interests at the expense of public health,” it said.
The IBC said that lack of a clear strategy on tobacco taxation and the undue influence of the cigarette industry had been identified as key contributors to that economic setback. Introduction of a three-tier system, introduced in 2017 ostensibly to control illicit trade, was the manifestation of industry’s influence over decision making, it added.
Sharing details and factors behind the decision of introducing three-tier system, the IBC claimed multinational companies used deceptive tactics that include exaggerated estimates of illicit trade to convince the government.
Similarly, a research conducted by Pakistan National Hearts Association (Panah) has revealed the fact that illicit cigarette trade is not more than 9 percent in Pakistan.
The IBC also referred to investigations launched against the loss to national exchequer in 2018 and Auditor General of Pakistan’s viewpoint regarding rationale behind the introduction of third tier and fake numbers of illicit trade.
Copyright Business Recorder, 2024
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