Cigarettes: experts recommend single-tier tax structure

ISLAMABAD: To effectively check cigarette consumption in Pakistan, experts and health advocates have strongly recommended a single-tier tax structure on cigarettes in the coming budget (2024-25).

Health activists have supported the International Monetary Fund’s (IMF) stance, emphasizing the urgent need for a revamp of tobacco taxation policies in Pakistan.

According to the IMF’s Technical Assistance Report titled “Pakistan Tax Policy Diagnostic and Reform Options,” released in February, the consumption of cigarettes in Pakistan has witnessed a notable decline of 20-25 percent following substantial hike in prices of tobacco products.

Experts stated that the findings of decline in consumption due to high taxes stressed the need for aligning the tax with the guidelines set by the World Health Organization (WHO).

They have called upon the government to transition to a Single Tier Tobacco Taxation System and eliminate the existing dual-tier system for both local and imported cigarettes.

The IMF’s advocacy for increased taxation on tobacco products not only seeks to curb cigarette consumption but also aims to bolster government revenue.

By implementing uniform excise rates and bridging the gap between local and foreign cigarette manufacturers, Pakistan stands to streamline its taxation system and mitigate the healthcare costs associated with tobacco-related illnesses.

The seventh-largest tobacco-consuming country globally, Pakistan signed the Framework Convention for Tobacco Control (FCTC) in 2004 to address and regulate tobacco use.

The World Health Organization (WHO) underscores the importance of robust tax measures in reducing tobacco consumption, particularly in low- and middle-income countries, by elevating tobacco prices.

However, the cigarette industry has persistently opposed tax hikes, disregarding the health consequences associated with the affordability of cigarettes, they added.

Copyright Business Recorder, 2024