Proposal of uniformed tax on cigarettes hailed
photo: file
Experts have welcomed the International Monetary Fund (IMF) report recommending Pakistan impose uniform excise rates on both local and foreign cigarette manufacturers.
The experts at an Islamabad-based think tank, Capital Calling, also applauded former health minister Dr Nadeem Jan calling for a 50 per cent increase in taxes on cigarettes to make them harder to access for the masses. They also endorsed the minister’s statement rubbishing the propaganda that a rise in taxes will lead to the smuggling of cigarettes, resulting in a loss to the national exchequer.
According to estimates, cigarette prices are the cheapest in Pakistan compared to other regional countries, it said.
The reports on IMF recommendations mention that it has suggested applying a consistent excise rate in one slab to all domestically produced cigarettes, regardless of the manufacturer’s origin. It means local and multinational manufacturers will face no discrimination in taxes. Currently, cigarettes are taxed in two tiers, which is resulting a low collection of taxation from the cigarette industry.
Furthermore, the IMF has also proposed subjecting e-cigarettes to taxation similar to traditional tobacco products, citing comparable health impacts. This recommendation is strictly in line with the guidelines set by the World Health Organisation (WHO), said Dr Hassan Shehzad, from International Islamic University.
He said due to the two-tier system, multinational companies manage to place their cigarettes in the lower tier which results in a reduction in cigarette prices. The objective of these recommendations is to ensure equitable taxation across cigarette products, regardless of their source.
According to the experts at the think tank, it is estimated that the government has faced Rs567 billion loss due to the influence of international tobacco companies. It said there is a dearth of research to measure the damage that smoking has done to society. The survey conducted to assess this damage was highly tilted towards economics, hence offering no solutions as to how to bring down smoking in society.
Similarly, there is no concrete media strategy to counter smoking and its psychological impacts, they said, adding that the majority of smokers are in their 30s and there is a need to think about this age group formulating policies.
The institutions formed to counter smoking suffer from a lack of coordination and vision; hence, fast losing their relevance. Capital Calling has demanded a reset of the mechanism to counter tobacco and full implementation of IMF recommendations for uniform tax on tobacco products, thinking of it as the right step to take.
Published in The Express Tribune, March 23rd, 2024.