Tobacco taxation in Pakistan: Activists question interference of few world bodies

ISLAMABAD: Anti-tobacco activists have questioned the interference of few international business associations in tobacco taxation in Pakistan.

This has been revealed by the Society for the Protection of the Rights of the Child (SPARC) and Pakistan Heart Association (PANAH) during a virtual pre-budget press conference on Sunday.

Malik Imran Ahmad, Country Head Campaign for Tobacco Free Kids (CTFK) deplored the negative role of few associations proposing decrease in tobacco taxes in Pakistan. He questioned why not these forums demanding decrease in tobacco taxation in their own countries? These organisations seem to be protecting interests of tobacco industries, while ignoring the economical and health disasters they cause.

He said in past big tobacco industry caused a huge Rs 153 billion 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 (fiscal year 2016-17). If their prices had remained the same, most would have automatically been reclassified as “medium” (89% of them). However, we find that major 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 Rs160 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, he added.

Malik Imran said that loss of revenue due to introduction of 3rd Tier (low tobacco taxes) has been estimated at Rs77.85 billion from 2016 to 2019. Loss of revenue due to price adjustments could be around Rs75 billion from 2018 to 2019.

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. He said around 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 64% 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. He said the worrisome aspect is the healthcare burden, which is 615 billion compared to revenue generation, which only stands at 110 billion currently, leading to loss to federal exchequer.

Speaking on the occasion, Sanaullah Ghuman General Secretary, Pakistan Heart Association (PANAH) said that considering the fact that the prices of tobacco products are still within the range of a minor, civil society organizations striving for better future generation of Pakistan is concerned with the situation. Heavy taxations on tobacco products will reduce the tobacco consumption and decrease the accessibility of minors to tobacco products.

He said this will not only reduce the health bill of government of Pakistan and contribute to clean and healthy environment for future generations.

Copyright Business Recorder, 2021