Uniform tax on tobacco products: Capital Calling hails IMF suggestion

30 May, 2024

ISLAMABAD: Capital Calling, an Islamabad-based think tank, has appreciated the reports suggesting that the International Monetary Fund (IMF) has remained steadfast in its recommendation for uniform tax on tobacco products regardless of their national or foreign branding.

Think tank stated that the reports about recommendation for over 20 percent tax raise on tobacco products are encouraging. Dr Hassan Shehzad, from International Islamic University, said estimates show that tobacco industry can do good with 40 percent tax raise in the coming budget.

Dr Shehzad, the only social researcher whose report was referred to by the IMF in its recommendations for tax reforms, says that copious research reports have found that if cigarette price increases its demand decreases. He said that during a survey of the major cities of the country, it was found that one in 94 smokers had quitted smoking after its price increase.

He said rise in illicit trade is another cause of concern. He expressed shock on the findings of the World Health Organization (WHO) stating that “illicit trade market in Pakistan (of tobacco products) ranges from 9 to 17 percent of the total cigarette market.”

The study is titled “Study on Incidence of Illicit trade of cigarettes in Pakistan: A case study for Islamabad Capital Territory.” The disturbing findings if the study is that “Overall, the illicit trade of cigarettes in Pakistan accounted for 23.1% of the total trade. Locally produced cigarettes without a stamp of the tax authority are considered illicit products and account for 10.4% of the total number of packs.”

Prof Muhammad Zaman, head of Zaman Research Center at Quaid-e-Azam University, says in a discussion of researchers that in a recent meeting of WHO titled “Global meeting to combat illicit tobacco trade concludes with decisive action,” it was presented that “Illicit trade accounts for about 11% of total global tobacco trade, and its elimination could increase global tax revenues by an estimated US$ 47.4 billion annually.”

Copyright Business Recorder, 2024

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