Health advocates concerned at no hike in cigarette tax rates

ISLAMABAD: Health advocates Friday expressed deep concern over the government’s decision to maintain current cigarette tax rates in the federal budget (2024-25).

A session organized by the Society for the Protection of the Rights of the Child (SPARC) and the Social Policy and Development Centre (SPDC) highlighted the negative implications for public health and revenue generation here on Friday.

Chief Guest Murtaza Solangi, Former Federal Minister for Information and Broadcasting, stated that the federal budget (2024-25) missed a critical opportunity to generate substantial revenue through increased cigarette taxes. This revenue could have been invested in public health, easing the economic burden on our healthcare system. Instead, maintaining current tax rates benefits cigarette manufacturers without additional excise tax contributions, undermining tobacco control efforts and worsening the public health crisis caused by tobacco use.

He further added that we must advocate for policies that prioritize public health and urge the government to implement measures that balance revenue generation with health objectives.” Managing Director of SPDC, Muhammad Asif Iqbal, said, “The government’s decision to spare the cigarette industry from any tax hike, despite the need to generate additional revenue to address the fiscal deficit, is concerning.

He said the FED revenue target of Rs324 billion for 2024-25 from Cigarette industry is unrealistically high without an increase taxes on cigarette sector and even with estimates suggesting a shortfall of over Rs100 billion. The Finance Act 2024’s changes benefit cigarette manufacturers by allowing price increases without additional excise tax revenue.

The government should adopt a dual approach of increasing the FED rate and implementing regulations to combat the illegal cigarette trade. Effective tobacco control policies should leverage higher cigarette taxes as a tool to discourage tobacco use and promote public health.”

Renowned tobacco control activist Malik Imran Ahmed, Country Head Campaign for Tobacco Free Kids added, the increase in the FED price tier thresholds benefit the cigarette manufacturing firms, allowing them to increase consumer prices without any additional contribution to excise tax revenue. This approach not only undermines our efforts towards tobacco control but also risks exacerbating the public health crisis caused by tobacco consumption.

Copyright Business Recorder, 2024