The recent suggestion by the World Bank to impose a tax on cigarettes equivalent to 0.4% of Pakistan’s GDP has garnered significant attention and support from health experts. This proposal, outlined in the Pakistan Development Update (PDU), has been advocated by various health advocacy groups, such as the Society for the Protection of the Rights of the Child (SPARC) and Campaign for Tobacco Free Kids (CTFK), emphasising its potential impact on both public health and economic prosperity.
Implementing the World Bank’s recommendation for increased federal excise duty on cigarettes holds a dual promise for Pakistan’s future. Health advocates stress that this move could significantly contribute to a healthier future for the nation’s youth while concurrently generating substantial fiscal resources. By aligning cigarette taxation with this proposal, the aim is to safeguard the health and well-being of Pakistan’s children.
The present dual-rate system for cigarette taxation, as highlighted by SPARC and CTFK, could see a significant reform. The suggestion to apply the current rate, currently levied on premium cigarettes, to standard ones is not only aligned with the World Bank’s proposal but also promises considerable changes in revenue generation.
The World Bank’s report underscores the economic and health benefits potentially derived from this tax reform. The current contribution of cigarette taxation to the GDP, at 0.19%, has remained relatively stable in recent years. Aligning with the proposed tax adjustment could yield a substantial revenue gain of 0.4% of the GDP (equivalent to Rs. 505.26 billion), according to the World Bank’s estimates. This aligning of taxation aligns with the goal of deterring smoking while generating much-needed revenue for essential public services.
Both SPARC and CTFK endorse the World Bank’s call for increased federal excise duty on cigarettes, highlighting its potential to substantially enhance fiscal resources while significantly improving public health outcomes. Khalil from SPARC reiterated the importance of aligning cigarette taxation rates and highlighted the potential for a considerable revenue gain through this adjustment. Swift implementation of this measure remains imperative for reaping the vast benefits it promises in health and economic domains.