ISLAMABAD - Tax policy on tobacco consumption is yet to achieve its goals, contrasting with successful efforts seen in other parts of the world through high taxation. It is because of the myth prevailing among policymakers that increasing taxes would hinder the revenue of the tobacco industry, experts on tobacco industry say.
“Increasing tobacco taxes leads to a reduction in tobacco consumption. Despite this empirical evidence, taxation policy remains weak in its battle against tobacco,” explained Malik Imran, an anti-tobacco activist.
Capital Calling, a network of academic researchers and professionals, believes that the alleged reluctance to effectively utilize tax policy to curb tobacco consumption may be attributed to the absence of a reliable estimate of the true economic costs of smoking.
Multinational tobacco companies have been claiming that tax increases would adversely impact their businesses and potentially force them to shut down production facilities. Consequently, the rise in the Federal Excise Duty (FED) has fuelled the growth of the illicit market, which now holds a 40 to 42 percent market share.
Khalil Dogar, another anti-tobacco activist, says that these techniques are merely employed to pressure the government against increasing taxes. Presently, every sector, including tobacco, faces challenges due to economic downturn, with the textile sector experiencing a 50 percent dip and companies like Honda and Toyota being forced to close factories.
Similarly, the subsidiary of a multinational cigarette maker in Pakistan has said that some of its production units are being shut down. Dr Hassan Shehzad, from IIUI, says that priority for the government should not be protection of industry of a non-essential commodity but public health. Increasing tobacco costs not only generates revenue but also cuts spending on tobacco-caused diseases.
Sanaullah Ghumman, a longtime anti-tobacco activist, has been constantly calling for meeting the WHO guidelines denoting that tobacco should be taxed on a regular basis.
According to the research, the total cost attributable to smoking- related diseases and deaths in Pakistan for 2019 stands at Rs 615.07 billion, with indirect cost (morbidity and mortality) constituting 70 percent of the total cost.
Cancer, cardiovascular diseases, and respiratory ailments account for the majority (71 percent) of smoking-induced costs. It says that it is imperative for the government to prioritize public health over corporate pressure and stay committed to its existing policy aimed at discouraging tobacco use through higher taxation.