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Business & Finance

SPDC urges govt to increase tax on tobacco in upcoming Federal Budget

  • This would not only help curb tobacco use in the country but would also contribute to generating more revenues that can be used for promoting public health.
20 Apr 2021

The Social Policy Development Centre (SPDC) in a report has urged the government to increase taxes on tobacco and cigarettes in the upcoming federal budget 2021-22, this would not only save lives but will provide further revenue.

SPDC in its report titled Modelling the Revenue and Health Implications of Tobacco Tax Policy in Pakistan: Options for the Federal Budget 2021-22 states that global evidence has established that tobacco use is a leading cause of deaths due to non-communicable diseases (NCDs), including cancers, chronic respiratory diseases, and cardiovascular diseases.

“Pakistan is not an exception to this situation: it has a high burden of tobacco use with resulting high costs from tobacco-related morbidity and mortality. With a prevalence rate of 19.1 percent, about 30 million adults (age 15 +) currently use tobacco in the country. Previous research shows that tobacco use killed an estimated 163,360 people in 2017 in Pakistan,” stated SPDC.

The analysis shows that raising the Federal Excise Duty (FED) rate even by only 30 percent would result in 219,000 fewer smokers; 3.8 percent reduction in smoking prevalence and 6.4 percent reduction in smoking intensity among adults; and prevention of 424,000 smoking-attributable deaths including 78,000 current adult smokers and 348,000 future young smokers.

“Further, it would generate additional revenue of Rs19 billion—an increase of 14.4 percent over the base year collection,” it said.

The report added that its results demonstrate that the proposed tobacco tax reform would greatly help the Pakistani government achieve its commitment to reduce tobacco use and its goal to reduce deaths from NCDs as per its pledge to achieve the Sustainable Development Goals and align its tobacco tax policy with global best practices.

This would not only help curb tobacco use in the country but would also contribute to generating more revenues that can be used for promoting public health.

“Beyond fiscal year 2020-21, to fulfil its long-term commitment to using tax and price measures to reduce tobacco consumption, the Government must continue reforming the tobacco tax system by: Implementing large excise tax increases in order to make cigarettes progressively more expensive and less affordable; Incorporating an automatic inflation adjustment mechanism in the tax policy; Moving to a uniform federal excise duty for all cigarette brands to simplify the tax system; and Harmonizing excise taxation across all tobacco products,” it said.