NGO for tax reforms in cigarette manufacturing sector

15 May, 2024

ISLAMABAD: Capital Calling, an Islamabad-based think tank, has pointed out that cigarette manufacturing is one of the sectors where tax reforms are needed on top priority basis in the coming budget (2024-25).

In a statement here on Tuesday, it stated that the donor agencies have pressed on the need to limit tax incentives to cases where their economic benefits, such as employment generation and value addition to the economy, outweigh the costs to the budget, it added.

Speaking at discussion by a group of researchers here on Tuesday, Dr Hassan Shehzad, from International Islamic University Islamabad (IIUI), commented that cigarette manufacturing industry’s contribution to employment generation or value addition to the economy is negligible.

On the other hand, it accounts for “over 163,600 people each year in Pakistan. Almost 31,000 of these deaths are due to exposure to second-hand smoke. Tobacco causes about 16.0% of all male deaths and 4.9% of female deaths. Overall, 10.9% of all deaths are caused by tobacco.”

Dr Muhammad Zaman, head of Zaman Research Centre (ZRC), Quaid-i-Azam University (QAU), said that there is evidence that consumption of tobacco declines when its price increases as it goes out of the reach of many users.

“Higher taxes on tobacco could reduce consumption in South Asia by at least one-third and avoid 35-45 million premature deaths, concludes an analysis published today in The British Medical Journal,” said Dr Zaman, quoting a research report.

He said that IMF’s recommendations for uniformed tax on cigarettes, regardless of their local or foreign brands, is praiseworthy and should be implemented forthwith.

Copyright Business Recorder, 2024

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