Cigarette industry: SDPI says revenue collection targets missed since 2017

ISLAMABAD: A new study conducted by Pakistani think tank Sustainable Development Policy Institute (SDPI) revealed that the cigarette industry missed revenue collection targets since 2017 following the three-tier excise duty structure introduced by the multinational cigarette companies.

A study on tobacco taxation in Pakistan by the Sustainable Development Policy Institute (SDPI) revealed that the Federal Board of Revenue (FBR) has missed almost all revenue collection targets from the cigarette industry since 2017, despite halving the tax on cigarettes in 2017. The study has also quoted year-wise data since 2017 to show the pattern of tax collection from the tobacco sector.

The country lost Rs 567 billion potential revenue in last seven years due to loopholes in policies, the report said.

Researchers and analysts have demanded urgent attention and comprehensive reforms to navigate through these challenges and counter the influence of these powerful cigarette industry giants.

The SDPI study has also shed light on the dynamics of the cigarette industry and its strong influence.

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 Pakistan lacks a clear strategy on using cigarette taxation and prices as a public health tool.

According to details, multinational cigarette companies pushed authorities to introduce a three-tier excise duty structure in 2017, while shifting the focus on revenue collection and ignoring adverse effects on public health.

However, it was later proved that the target of collecting more revenue through introduction of the third tier was also missed and was grossly misleading.

It was the time cigarette prices in Pakistan were lowest in the world which fueled the consumption and ultimately put burden on the country’s fragile healthcare system.

The World Health Organisation (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 added.

Copyright Business Recorder, 2024