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Finance Minister Aurangzeb hailed for tobacco tax reforms

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ISLAMABAD – It is encouraging that Finance Minister Muhammad Aurangzeb has given hope to the masses that the country could get a $3 billion package from the International Monitory Fund (IMF), which is considered vital for sustaining the falling economy.

However, Dr Aftab Madni, dean of Indus University, underlined the need to implement the IMF’s recommendations regarding tax reforms in a true spirit. “Picking and choosing wouldn’t help the reform process,” he said.

He stressed that the IMF has explicitly recommended a uniform tax on cigarettes regardless of their national or multinational brand. This alone will generate billions in revenue.

He said cigarettes are a non-essential item, and the government wouldn’t face any public backlash if it moves ahead as per IMF recommendations.

He said that about 9 per cent of Pakistanis are smokers, and the volume of second-hand smoke still has to be explored. The cigarettes need to be made expensive in any case.

It causes diseases and deaths that have to be accounted for. He appreciated Dr Hassan Shehzad from the International Islamic University Islamabad for being the only researcher whose report the IMF has referred to in its recommendations for tax reforms.

He said that the report had established a link between consumption and affordability.

Dr Shehzad quoted the minister as saying, “The country’s current $3 billion arrangement with the fund runs out in late April, and the government is seeking a long-term and bigger loan to help bring permanence to macroeconomic stability and provide an umbrella under which the country can execute much-needed structural reforms.”

He added that reports have mentioned that the cigarette industry is responsible for losing Rs567 billion to the national exchequer in less than a decade.

He said that the finance minister has a profound background in banking, and it is normal for a banker to understand the volume of losses a product harmful to human health can cause.

He said imposing a uniform tax on tobacco products is too little and too late, but it has to be done. Dr Shehzad is a leading researcher in the country who has impacted policymaking.

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