ISLAMABAD - The implementation of health levy on tobacco products will not only increase the tax revenue of the government but will also help in reducing the adult cigarette consumption, said a study, Thursday.  Tobacco control activists in a session held here shared the findings of a study conducted by World Health Organization (WHO), Bloomberg Initiative, and Campaign for Tobacco-Free Kids and University of Illinois, Chicago.

The study proposes tobacco tax reforms from 2019-22 urging the government to increase the taxes on tobacco products for generating revenue from the tobacco industry.  Technical Advisor Pakistan National Heart Association (PANAH) Malik Imran said that the study was conducted by independent groups proposing government to increase the tax on tobacco for revenue generation.

He said that the tax reform model will also contribute to significant reduction in adult cigarette consumption by almost 42% (about 28 billion sticks) and will also reduce smoking prevalence by about 2.15 p.p., from 10.4%. The tax reform would also reduce the number of smoking-related deaths among current and future smokers by about 11% which is a reduction of about 1.1 million.

He added that the introduction of the third tier by the government in 2017 increased the tobacco consumption in the country; it also caused around Rs60billion loss to the national exchequer.  He said that before the introduction of third tier, the tobacco industry was contributing Rs114billion rupees in the national exchequer, however in the last two years it added around Rs70billion and 80billion in 2017-18.  He said that 90percent population was consuming low price cigarettes and government relaxed the tax for companies in those tiers.  “This relaxation on tax in 2017 ultimately benefited the tobacco industry but less tax was added into the national kitty in those years,” he said.

He also added that the volume of illicit trade is very low as claimed by the tobacco industry and the data presented to the government by the industry is also challengeable.

It was also stated that the cigarettes contain more than 60 chemicals which leads to cancer, while increase of tobacco consumption in females is also alarming.

The proposed tobacco tax reforms recommended that short-term, medium term and long term fiscal plans for government for years 2019/20,2020/2021 and 2021/2022. The calculations predicted that the tax reform would generate significant additional total tax revenue of about PKR 205.9 billion over 3 years, equivalent to an average annual increase in total tax revenue of about 51% (or about PKR 32.3 billion per year).  The experts also anticipate an increase in the excise tax share in the price from about 45.9% currently to 57.6%, somewhat closer to the 70% level recommended by the WHO.

Participants expressed confidence that recommendation for tobacco tax reform, if adopted by the government it will prove to be an effective policy that will simplify Pakistan’s tobacco tax system, thus reducing government’s administrative costs and will further align it with best global practices. Furthermore, the proposal can significantly reduce tobacco use and save lives while raising significant additional tax revenue that can fund government health programs, including tobacco control programs, a ‘win-win’ for tobacco control.

Participants demanded the government to  implement crucial  measures to further strengthen the tax system; regularly increase the excise tax to account for inflation and income growth and reduce cigarette affordability; harmonize all taxes across tobacco products; and fully implement the Protocol to Eliminate Illicit Tobacco Trade, particularly the measures for supply chain control, such as license, tracking and tracing and record keeping, and align the protocol with the legislation on prosecutions and sanctions for tax evasion. Participants urged the government to add anti-smoking lessons in the curriculum to discourage smoking in the upcoming generations.

Earlier Director General (DG) WHO Dr Tedros Adhanom Ghebreyesus appreciated the move of the government of implementing ‘Health Tax’ on tobacco products