- The study said that the tobacco industry’s total tax contribution (120 billion in 2019) is approximately just 20 percent of smoking’s total cost. It found that indirect costs (morbidity and mortality) make up 70 percent of the total cost.
Pakistanis suffer losses to the tune of several billions of dollars owing to economic costs attributed to smoking-related diseases and deaths.
As per the latest study conducted by the Pakistan Institute of Development Economics (PIDE) titled The Economic Cost of Tobacco-Induced Diseases In Pakistan by Durre Nayab, Muhammad Nasir, Junaid Alam Memon, and Omer Siddique. The total costs attributable to all smoking-related diseases and deaths in Pakistan for 2019 are Rs 615.07 billion (US$3.85 billion).
The study said that the tobacco industry’s total tax contribution (120 billion in 2019) is approximately just 20 percent of smoking’s total cost. It found that indirect costs (morbidity and mortality) make up 70 percent of the total cost.
The major share (71 percent) of the total smoking-induced cost comes from cancer, cardiovascular, and respiratory diseases.
The report revealed that despite the evidence that higher tobacco taxation discourages tobacco consumption, Pakistan has a highly lenient tobacco tax policy. “Consequently, the tobacco industry enjoys a thriving customer base, currently comprising 24 million active tobacco users.”
As per the report, tobacco use has enormous direct and indirect costs. Direct costs include inpatient and outpatient hospital expenses, whereas indirect costs include the caregiving costs, the opportunity cost of the lost workdays of the patients and their caregivers, the cost of smoking-attributable deaths.
The report found that smoking-attributable total direct and indirect cost of cancer, cardiovascular, and respiratory diseases amount to Rs 437.76 billion (US$ 2.74 billion). “The cost of these three diseases is 3.65 times higher than the overall tax revenue collected from the tobacco industry, which was Rs 120 billion in 2019.”
The report recommended an increase of four to five times the current tax rate on the tobacco industry. “However, as a start, it is imperative that the Federal Board of Revenue (FBR) raises excise taxes to meet the WHO’s recommended threshold of 70 percent of the retail price of a cigarette pack.”
Furthermore, FBR must narrow the tobacco industry’s tax maneuvering space by gradually moving to a single-tier taxation system.