ISLAMABAD—Health experts have called for the implementation of the World Bank’s recommendation for an increase in the Federal Excise Duty (FED) on cigarettes in the wake of the snowballing economic burden in terms of public health and financial costs due to rising cigarette consumption.
Director of the Center for Research and Dialogue (CRD), Amjad Qamar, believed, “Increasing FED on cigarettes will check the steady rise in consumption and ensure a healthier future for Pakistan’s youth.”
He further stated that Pakistan was one of the largest tobacco-consuming countries, and low prices of cigarettes were the major contributor in that respect.
“Cigarettes are more affordable in Pakistan than the rest of the region,” Qamar added.
Taxation policies of successive governments have failed to generate revenue as well as to curb the alarmingly high smoking rate due to policies that industry giants, particularly multinational companies, often manipulate.
According to the Federal Board of Revenue (FBR) yearbooks, the country has lost Rs 567 billion in revenue during the last seven years.
On the other hand, a study conducted by the Pakistan Institute of Development Economics (PIDE) pointed out that the cost of smoking-related diseases and deaths was Rs 615.07 billion ($3.85 billion) in 2019, amounting to 1.6% of the GDP.
Country Director of Campaign for Tobacco-Free Kids (CTFK) Malik Imran Ahmed referred to the World Bank’s report titled ‘Pakistan Development Update’ and said that a significant revenue gain of 0.4 percent of GDP (PKR 505.26 Billion) could be achieved by applying the current rate on premium cigarettes (Rs. 16.50 per cigarette) to standard cigarettes as well.
The report underscores the potential for economic and health benefits through this measure.
Malik Imran added that aligning cigarette taxation with the World Bank’s recommendation is a crucial step toward safeguarding the health and well-being of Pakistan’s children.
He said higher excise duty on cigarettes not only deters smoking but also generates much-needed revenue for essential public services.
The International Monetary Fund (IMF) has also recommended that Pakistan overhaul tax machinery and tax non-essential items, including cigarettes, to boost revenue and improve public health.
The global lender has recommended that the government introduce a single-tier tax structure and significantly increase tobacco product taxes.
According to the IMF’s Technical Assistance Report titled “Pakistan Tax Policy Diagnostic and Reform Options,” released in February, the consumption of cigarettes in Pakistan has witnessed a notable decline of 20-25 percent following substantial hikes in taxes on tobacco products.
