ISLAMABAD - All smoking-related diseases and deaths in Pakistan cost the national exchequer over $3.85 billion annually while the tobacco industry’s total tax contribution is approximately just 20 percent of the smoking’s total cost, reveals a policy brief “The Huge Economic Cost of Tobacco-Induced Diseases in Pakistan”.
According to the research study conducted by the Pakistan Institute of Development Economics (PIDE), indirect costs (morbidity and mortality) make up 70 percent of the total cost.
The major share (71 percent) of the total smoking-induced cost comes from cancer, cardiovascular, and respiratory diseases.
The actual economic cost, which includes morbidity, mortality, and opportunity costs, is fivefold the tax revenue collected from the tobacco industry, it said.
The study recommended that keeping in view the economic and health costs of tobacco consumption, an increase of four to five times the current tax rate is strongly recommended. However, as a start, it is imperative that the FBR raises excise taxes to meet the WHO’s recommended threshold of 70 percent of the retail price of a cigarette pack.
The study found that despite the evidence that higher tobacco taxation discourages tobacco consumption, Pakistan has a highly lenient tobacco tax policy. Consequently, the tobacco industry enjoys a thriving customer base, currently comprising 24 million active tobacco users.
Former Head of the Tobacco Control Cell Pakistan and Country’s former focal person for FCTC Dr. Ziauddin Islam said the government should reduce the purchasing power of new smokers by increasing taxes on the tobacco.
He said that once the number of smokers is reduced, this would automatically help bring down the number of tobacco-related diseases and overall health cost in the country.
The PIDE study also said the industry has created an illusion of being one of the largest taxpayers in Pakistan. Due to the absence of the calculated costs of tobacco consumption in Pakistan, policymakers cannot compare the true economic cost of tobacco consumption with the revenue receipts and submit to the industry’s claims, it said.