ISLAMABAD – The International Monetary Fund (IMF) has recommended that Pakistan overhaul tax machinery and tax non-essential items, including cigarettes, to boost revenue and improve public health.
The global lender has made a set of recommendations, and health advocates and experts have appreciated taxing non-essential items, including cigarettes.
This is a crucial time for the government to fix economic problems and implement the IMF recommendation,” said Professor Muhammad Zaman, head of the Zaman Research Center at Quaid-i-Azam University (QAU).
He said the IMF report refers to a phenomenal study on this subject conducted by Capital Calling, an Islamabad-based think tank. The study says cigarette consumption has decreased due to an increase in prices.
He said there is a need to bring into account the cost of morbidity and mortality that smoking inflicts on society.
“Smoking is injurious to health regardless of the cigarette brand,” he said. He pointed to critical flaws within Pakistan’s tax system, particularly the cigarette industry, which, as revealed by the Sustainable Development Policy Institute (SDPI), has facilitated a loss of Rs567 billion during the last seven years.
The study further exposed the influence of multinational cigarette companies on policymakers, particularly evident in the introduction of a three-tier excise duty structure in 2017, which prioritized revenue collection over public health considerations. However, subsequent analysis proved this approach ineffective and misleading in revenue generation.
The SDIP research highlights global best practices and how high and middle-income countries have successfully used high cigarette taxes to reduce consumption and boost government revenues.
Pakistan, however, lacks a coherent strategy for utilizing cigarette taxation and pricing as a public health tool.
Dr Hassan Shehzad from the International Islamic University Islamabad (IIUI) echoed sentiments from the World Health Organization (WHO), stressing the need to shield tobacco tax policies from the vested interests of cigarette companies to ensure effective development, implementation, and enforcement of public health initiatives.
