ISLAMABAD – The uphill task for the new government is to synchronize the efforts of health and finance ministries to counter the menace of smoking.
With 24 million active tobacco users, Pakistan is among the world’s top tobacco-consuming countries, according to a report prepared by the Pakistan Institute of Development Economics (PIDE).
Another Islamabad-based Think Tank, Capital Calling, has stated in a report that Pakistan has become a breeding ground for multinational cigarette companies. According to an estimate, cigarette prices are the cheapest in Pakistan compared to other countries.
The think tank pressed on the need to tax cigarettes under the WHO guidelines, which call for holding cigarette companies accountable for the health and environmental losses they make.
The PIDE report, however, adds that tobacco use is associated with many adverse health effects. Still, its tax revenue causes tobacco tax policy inertia in Pakistan and other countries. “Despite evidence that higher tobacco taxation discourages tobacco consumption, Pakistan’s tax policy is among the weakest action areas in the country’s fight against tobacco,” it says. “One explanation could be that the policymakers who consider the tobacco industry a major contributor to government coffers are reluctant to raise taxes fearing the revenue loss,” it says.
However, when the government abolished the third tax tier in 2019, which effectively reduced the tobacco industry’s manoeuvring space to sell cheaper cigarettes by avoiding taxes, the tax contribution of the sector increased to 120 billion Pakistani rupees (Rs), in just one year, compared to Rs 92 billion. This raised the tobacco industry’s share of total tax collection to 3 percent from 2.15 percent in FY16.
The government’s reluctance to change the tobacco tax policy is partly due to its failure to fully appreciate the smoking-attributable fraction (SAF) of health and social costs. This makes its benefit-cost analysis of tax revenue faulty and compromised
over health outcomes.
The PIDE resport further states, “Smoking prevalence in Pakistan is 8.8 percent…Nationally, cardiovascular
diseases are the most prevalent in the year 2019. Cardiovascular diseases are also most
prevalent, followed by cancer, in urban regions, across both genders and in Punjab and Khyber
Pakhtunkhwa (KP) provinces.
The total smoking-attributable fraction of the direct cost of three diseases is Rs 100.3 billion ($0.63 billion), of which the medical expense is 96 percent (Rs 96.24 billion or US$0.60 billion), and the non-medical cost is four percent (Rs. 4.06 billion US$0.03 billion). Smoking-attributable indirect morbidity cost is Rs 56.32 billion ($0.35 billion). The morbidity cost is 56 percent.
Prof. Muhammad Zaman, who teaches sociology at Quaid-i-Azam University (QAU), said that the hazards of smoking should not be calculated in segments. “The policymakers should look at it in totality. It is high time to discourage cigarette companies’ tactics to influence governments worldwide. We expect that the new government will not fall into the trap of these companies and will fix the loopholes in the tax system to catch the big fish.”
