ISLAMABAD—To combat Pakistan’s alarming cigarette consumption rates, experts and health advocates have endorsed the International Monetary Fund’s (IMF) compelling recommendation of transitioning to a single-tier tax structure alongside a significant increase in tobacco product taxes.
According to the IMF’s Technical Assistance Report, “Pakistan Tax Policy Diagnostic and Reform Options,” released in February, the consumption of cigarettes in Pakistan has declined by 20-25 per cent following a substantial hike in tobacco product prices.
The findings of the decline in consumption due to high taxes breathed new life into calls for aligning the tax with the guidelines set by the World Health Organization (WHO).
Health activists have also supported the IMF’s stance, emphasizing the urgent need to revamp Pakistan’s tobacco taxation policies.
They have called upon the government to transition to a single-tier tobacco Taxation System and eliminate the existing dual-tier system for both local and imported cigarettes.
The IMF’s advocacy for increased taxation on tobacco products seeks to curb cigarette consumption and bolster government revenue.
By implementing uniform excise rates and bridging the gap between local and foreign cigarette manufacturers, Pakistan stands to streamline its taxation system and mitigate the healthcare costs associated with tobacco-related illnesses.
The seventh-largest tobacco-consuming country globally, Pakistan signed the Framework Convention for Tobacco Control (FCTC) in 2004 to address and regulate tobacco use.
The World Health Organization (WHO) underscores the importance of robust tax measures to reduce tobacco consumption, particularly in low—and middle-income countries, by elevating tobacco prices.
However, the cigarette industry has persistently opposed tax hikes, disregarding the health consequences associated with the affordability of cigarettes.
Pakistan has suffered a staggering loss of 567 billion rupees in revenue over the past seven years due to the influence of MNCs lobbying against tax increases.
A study conducted by the Pakistan Institute of Development Economics (PIDE) underscores the dire repercussions of smoking-related diseases and deaths, with costs soaring to Rs 615.07 billion ($3.85 billion) in 2019, amounting to 1.6% of the GDP.
