LAHORE – Taxation is a key revenue source for any government and taxing non-essential items such as tobacco leads not only to a cut in budget deficit but also in the expenditure on diseases.
Malik Imran, Country Head, of Campaign for tobacco-free kids (CTFK), mentioned that due to the government’s decision of increasing Federal Excise Duty (FED) on cigarettes in February 2023, an additional 11.3 billion FED revenue was obtained in fiscal year 2022-23 which is an increase of 9.7% from the previous year.
Furthermore, an additional 4.4 billion in VAT revenue was obtained in the fiscal year 2022-23 which is an increase of 11.5% from the previous year. This additional 15.7 billion revenue makes up 0.201% of GDP which is a significant boost for a struggling economy like Pakistan, he said.
He was speaking at an event organized by the Society for the Protection of the Rights of the Child (SPARC). At the event, health activists presented a Simulation Model on Tobacco Taxation which explained how increased tobacco taxation is a win-win situation for the government and the people of Pakistan.
Imran mentioned that these self-explanatory figures reveal that increased taxation is beneficial for the economy but the tobacco industry misleads everyone by crying the illicit trade excuse.
Imran added that the blown-up figure of illicit trade diverts people from underreporting. These companies underreport their production and then sell their non-reported products in the illicit market, causing billions of losses to the national exchequer.
Dr Ziauddin Islam, a retired government employee, said that tobacco is the most giant silent killer in Pakistan as above 170,000 people die due to tobacco use each year. This pandemic also causes an annual economic burden of 615 billion which is 1.6% of Pakistan’s GDP. He explained that increased prices bring a decrease in production and consumption which decreases the health cost burden.
According to the estimates, there has been a 31.7% decline in the declared production of cigarettes in the fiscal year 2022-23 compared to the previous year. Learning from this example, which is also recommended by World Health Organization, Pakistan should increase taxes at regular intervals so that inflation and per capita income are accounted for and Pakistanis remain protected from the harms of tobacco products.
Khalil Ahmed Dogar, Program Manager SPARC said that the children of Pakistan are being targeted by the tobacco industry so that “replacement smokers” could be recruited. Around 1200 Pakistani children between the ages of 6-15 years start smoking every day. He mentioned that on average Pakistani smokers spend 10% of their monthly income on cigarettes. Therefore increased prices remain the most effective tool in keeping these killer products away from the spending power of children and low-income groups.
Khalil added that all stakeholders must cast their differences aside and unite to protect our children and youth from the harms of tobacco. Increasing tobacco taxes is such a step which should be regularly implemented.
