ISLAMABAD: Health experts have strongly proposed the Federal Board of Revenue (FBR) to raise taxes on all kinds of tobacco products by 40 percent in budget (2024-25) to reduce consumption, increase revenue and bridge the gap in health costs associated with smoking.

Experts have submitted the said proposal to the government during a pre-budget seminar on “optimizing tobacco taxation in Pakistan” held here on Tuesday.

This proposed increase would translate into a substantial rise in government revenue, estimated to reach Rs 336 billion from the current Rs 240 billion. The intervention would also significantly impact health costs associated with smoking, projected to be reduced from Rs 615 billion to Rs 418.2 billion, effectively reducing the gap between revenue and health costs to Rs 82 billion.

Muhammad Asif Iqbal, Managing Director of the Social Policy and Development Centre (SPDC) said smokers’ response to price changes suggests an enormous potential for taxation to discourage smoking in Pakistan.

As a result of the recent hike in the FED on cigarettes and the corresponding increase in prices, cigarette consumption has declined by 19.2 percent.

Murtaza Solangi, Former Caretaker Minister of Information and Broadcasting said all stakeholders must cast their differences aside and unite to protect our children and youth from an industry which is causing billions of losses to the national exchequer.

Increasing tobacco taxes is such a step which should be regularly implemented. The low cigarette prices are the reason why children and young people initiate smoking.

Malik Imran Ahmad, Country Head Campaign for Tobacco Free Kids (CTFK) said that the effectiveness of high tobacco taxation as a vital measure in combating tobacco consumption, as advocated by the World Health Organization (WHO).

The industry can absorb at least a 40% increase in taxes, and the IMF and World Bank have recommended Pakistan introduce a single-tier tax structure for cigarettes.

Despite efforts to increase taxes, low cigarette prices persist, contributing to sustained high consumption levels. By adopting these reforms, Pakistan can make cigarette taxation more effective and align it more closely with international best practices. He added that the cigarette prices in Pakistan are still cheaper as compared to other countries.

Copyright Business Recorder, 2024

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