Tobacco taxation restructuring: Health activists support IMF’s recommendation

ISLAMABAD: Pakistan has suffered economic losses due to the dominance of the cigarette industry, high consumption rates and subsequent health cost over the years.

Health activists Friday supported International Monetary Fund’s (IMF) recommendation of restructuring tobacco taxation in Pakistan.

The International Monetary Fund (IMF), in its report, urged Pakistan to implement uniform taxation on cigarettes, emphasizing the need to address health concerns and generate maximum revenue from the sector.

The IMF’s recommendation comes in the wake of a significant decline in cigarette consumption by 20-25 percent following an increase in taxes on tobacco products. It also advocates subjecting e-cigarettes to similar taxation as traditional tobacco products, highlighting comparable health impacts.

The Sustainable Development Policy Institute (SDPI) has previously highlighted discrepancies in the tax collection framework.

Former federal Minister for National Health Services, Dr Nadeem Jan, also advocated for a substantial 50 percent tax increase on tobacco products to deter consumption, especially among youth, citing severe health concerns. His demand is based on article 6 of WHO Framework Convention on Tobacco Control.

Pakistan’s commitment to the Framework Convention on Tobacco Control (FCTC) underscores the importance of a unified pricing system for cigarettes to regulate the industry effectively and discourage consumption.

The World Health Organization (WHO) advocates for robust tax measures to reduce tobacco consumption, citing the effectiveness of a 10% increase in tobacco prices typically leads to a 4% decrease in overall tobacco consumption in high-income countries and up to an 8% decrease in low- and middle-income countries.

A study by the Pakistan Institute of Development Economics (PIDE) highlights the dire consequences of smoking-related diseases and deaths, with costs amounting to Rs615.07 billion ($3.85 billion) in 2019, equivalent to 1.6% of the GDP.

Copyright Business Recorder, 2024