ISLAMABAD – The Islamabad-based think tank Capital Calling has hailed the reports suggesting that the International Monitory Fund (IMF) has remained steadfast in its recommendation for uniform tax on tobacco products in the upcoming budget regardless of their national or foreign branding.
The think tank said the reports about the recommendations for an over 20 percent tax raise on tobacco products were encouraging.
Dr Hassan Shehzad, from International Islamic University Islamabad (IIUI), said that estimates show that the tobacco industry can benefit from a 40 percent tax increase in the coming budget.
Dr Shehzad, the only social researcher whose report was referred to by the IMF in its recommendations for tax reforms, believed that copious research reports have found that if cigarette prices increase, its demand decreases. He said that during a survey of the country’s major cities, it was found that one in 94 smokers had quit smoking after its price increase.
He said the rise in illicit trade was another cause of concern and expressed shock at the World Health Organization (WHO) findings that the “illicit trade market in Pakistan (of tobacco products) ranges from 9 to 17 percent of the total cigarette market.”
The study was titled “Study on Incidence of Illicit Trade of Cigarettes in Pakistan: A Case Study for Islamabad Capital Territory.” The disturbing findings of the study are that “Overall, the illicit trade of cigarettes in Pakistan accounted for 23.1% of the total trade. Locally produced cigarettes without a stamp of the tax authority are considered illicit products and account for 10.4% of the total number of packs.”
Prof Muhammad Zaman, head of Zaman Research Center at Quaid-i-Azam University, has said in a discussion of researchers that in a recent WHO meeting titled “Global meeting to combat illicit tobacco trade concludes with decisive action,” it was presented that “Illicit trade accounts for about 11% of total global tobacco trade, and its elimination could increase global tax revenues by an estimated US$47.4 billion annually.”
Hence, he said, the volume of illicit trade in Pakistan was double the global average. He also said that the government should take corrective measures to stop this practice. He said the multinational cigarette companies that operate in Pakistan have been found involved in many illegal activities in different parts of the world. One of the companies was recently fined heavily for such practices in its home country.
Prof Zaman said the illicit trade and lower taxes on tobacco products are harming public health. He said the government should address both these points as soon as possible.
