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ISLAMABAD: The social activists and health experts Sunday highly appreciated government’s decision of higher taxation on cigarettes, as increased Federal Excise Duty (FED) would ultimately save 260,000 lives across Pakistan.

Mohammed Shahid Khan, a social activist in KPK, working actively on an anti-smoking campaign among the youth, finally sees a real quit-smoking scenario in his village.

Khan claims that 99 percent males in his village, both children and adults, are heavy smokers, and affordability has been its major contributor.

“It was easier to afford a cigarette than a schoolbook. We have spent millions on discouraging people from smoking in the last 10 years, but nothing has been working out,” he said.

Khan has witnessed miraculous change in the last 10 days. “I have witnessed deserted shops and street-corners that were once the hotspots of smokers,” he said.

Every month, more than 1,500 children under the age of 15 become active smokers in Pakistan. “It is assumed that future smokers and present youth are more responsive to the changes in cigarette prices compared to adult smokers,” said Khan.

Khan is not the only one celebrating this positive change. Health activists across the country have hailed the government’s bold move while the [tobacco] industry giants are furious.

Over 10 days ago, through a mini-budget, the government of Pakistan increased the Federal Excise Duty (FED) rate on cigarettes to 154 percent.

In the budget, the government increased the FED rate for the less expensive brand by Rs 3,000 per 1,000 sticks to Rs 5,050 and by Rs 10,000 for expensive brands to Rs 16,500.

This has increased the price from 146 percent to 154 percent. The minimum sale price threshold was also increased from Rs 6,660 to Rs 9,000 – a surge of 35 percent. If the cigarette price crosses Rs 9,000 per 1,000 sticks, it will attract a Rs 16,500 rate.

Pakistan ranks among the worst-performing countries in the Tobacconomics Cigarette Tax Scorecard. This time, the credit goes to IMF that has used the opportunity to pressurize the government to increase FED on tobacco.

Dr Ata, who runs a local clinic in Islamabad, says that the government has saved more than 260,000 people from turning into smokers by increasing due taxes.

“It has been a blessing in disguise. It can only be described a popular decision by an unpopular government,” says Dr. Ata.

More than 170,000 people die due to smoking-related diseases every year. For as many as 31 million adults - about one-fifth of those currently using tobacco - cigarette consumption becomes the leading cause of death.

The total cost of all smoking-attributable diseases and deaths in Pakistan was estimated at PKR 615 billion (US$ 3.85 billion) in 2019. It includes direct health costs and lost productivity costs.

Moreover, tobacco use has welfare implications as poor households in Pakistan spend a larger proportion of their budget on tobacco compared to rich households, resulting in less spending on basic needs.

Domestically-produced cigarettes in Pakistan are subject to two major indirect taxes — the Federal Excise Duty (FED) accounts for almost 80 percent of the revenue from the sector.

Due to stagnant and low tobacco taxes, Pakistan is ranked among the worst-performing countries in the Tobacconomics Cigarette Tax Scorecard that evaluates the strength of tax systems — with an overall tax system score of less than one on a five-point scale.

The number of smoking-related deaths is calculated by assuming that tobacco eventually kills half of all people who use it on a regular basis. Seventy percent of smoking-attributable deaths could be avoided if current smokers quit smoking. And that’s a huge achievement to celebrate that government has done it.

Copyright Business Recorder, 2023

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Hussain Raza Apr 10, 2023 10:15am
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