Cigarette industry: Influence on policymaking caused Rs567bn revenue loss in last 7 years

ISLAMABAD: The influence of cigarette industry on policymaking has not only impacted nation’s financial well-being and public health, but also caused a staggering Rs 567 billion revenue loss during the last seven years.

The alarming loss of revenue was unearthed through a comprehensive study delving into the dynamics of the cigarette sector and scrutinizing Federal Board of Revenue (FBR) data by the SDPI.

The SDPI referred to a Pakistan Institute of Development Economics (PIDE) data that the total costs attributable to smoking-related diseases and deaths in Pakistan for 2019 reached an additional Rs 615.07 billion ($3.85 billion), with indirect costs (morbidity and mortality) making up 70% of the total cost.

However, the cigarette industry managed to influence decision making, which not only resulted in Rs 567 billion loss in potential revenue but also put extra burden on the country’s fragile healthcare system, the SDPI study revealed.

In its report titled “Pakistan: Overview of Tobacco Use, Tobacco Control Legislation, and Taxation,” a leading international donor has also revealed that the decline in government revenue in the 2016-2017 fiscal year was carefully planned by the powerful cigarette industry, SDPI quoted donor agency.

The SDPI’s study brings attention to the influence of multinational companies and the introduction of a three-tier excise duty structure, raising concerns about tax evasion and its adverse effects on public health.

The intricate examination of associated factors indicates that safeguarding revenue streams while prioritizing public health requires a careful reevaluation of tax policies, SDPI report said.

The World Health Organization (WHO) emphasises the need to safeguard tobacco tax policies from vested interests of cigarette companies for effective development, implementation, and enforcement of public health initiatives. However, it did not happen in Pakistan, the study said.

The study also highlighted how high and middle-income countries successfully imposed high taxes on cigarette products to decrease consumption and increase government revenues, but the fact remains that Pakistan still lacks a clear strategy on using cigarette taxation and prices as a public health tool.

The National Accountability Bureau (NAB), Senate Special Committee, and the Auditor General of Pakistan Revenue (AGPR) have also endorsed the challenges posed by the multinational cigarette industry, according to the study.

The cigarette industry in Pakistan which is dominated by two multinational companies have immense control and influence over policymakers. The multinationals have long been blamed for forcing the government to rely on questionable data on the cigarette market.

As the nation grapples with these alarming findings, experts suggest that implementing high taxes on cigarettes can serve as a proactive measure in promoting public health and simultaneously bolstering the nation’s economic well-being, the SDPI said.

Copyright Business Recorder, 2024