Health levy on tobacco consumption | By Khalil Ahmed Dogar


Health levy on tobacco consumption

RENOWNED American clinical psychologist and author Anne Wilson Schaef once said “Good health is not something we can buy.

However, it can be an extremely valuable savings account”. The Economic Survey of Pakistan 2020-21revealed that Pakistan spent 1.2 per cent of its total gross domestic product (GDP) on health whereas World Health Organization (WHO) recommends this figure to be at least 5 per cent.

Pakistan ranks in lower echelons in all health related indexes, which shows that good health is something we can buy if we invest in it.

Tobacco consumption also plays a significant role in Pakistan’s poor health ranking. According to World Health Organization the number of smokers in Pakistan has reached up to 29 million.

Due to cheap and easy affordability nearly 1200 children start smoking every day in the country.

As a result, the tobacco consumption is causing serious health implications on Pakistanis by making them suffer from non-communicable diseases like cancer, diabetes, heart disease, stroke, and chronic lung diseases.

Yearly, 170,000 people die due to tobacco consumption. On financial side, the use of tobacco causes annually an economic burden of 615 billion which is 1.6% of Pakistan’s GDP.

However, the revenue generated from the tobacco industry was 120 billion in 2019 which is approximately just 20 percent of smoking’s total cost.

This leads to significant negative externalities, including high healthcare costs and lost productivity due to tobacco-attributable diseases.

Pakistan became a Party to the WHO Framework Convention on Tobacco Control (FCTC) on 27 February 2005.

Imposing ‘Health Levy’ is among key recommendations by FCTC to reduce tobacco consumption.

The principle is there should be an additional ‘sin tax’ on all non-essential products, which pose harms to human health and environment.

This tax should be independent of the regular taxes so that it can serve as a warning to the manufacturers and consumers.

In June 2019, the federal cabinet decided to implement a healthy levy on tobacco products.

Unfortunately, some renowned politicians have repeatedly blocked this move because of their involvement with the industry.

The Federal Board of Revenue (FBR) maintains that after 18th Amendment to the Constitution of Pakistan, health has become a provincial subject and all provinces should impose health levy as per their own choice. However, no provincial government has made a move in this regard since 2019.

FBR has also said that the federal share from the ‘increased’ federal excise duty goes to Ministry of National Health Services Regulations and Coordination.

However, the average increase of 10.8% in excise tax on cigarette in Finance Bill 2022 is even lower than the 13.3% inflation.

As a result cigarettes will become affordable than two years ago. Therefore, it is important to impose health levy immediately otherwise the number of smokers in Pakistan will go beyond our control, as the country currently has no national program for mental and physical rehabilitation of tobacco consumers.

Pakistan is facing a severe economic crisis and the threat of COVID-19 pandemic still remains.

We cannot afford to lose any more precious lives and money fighting the plague of tobacco consumption.

The revenue required for curing tobacco-induced diseases should be fully recovered from the tobacco taxes including health levy.

In order to counter these challenges, the government needs to adopt a sustainable National Tobacco Control Policy, which must provide clear-cut guidelines on increasing taxation and health levy on a yearly basis in accordance with inflation.

The policy should also aim to end tobacco industry’s influence in policy making.

Lastly at provincial and federal levels strict implementation of the laws is required and it must be ensured that the taxes collected from tobacco are spent on public health schemes.

—The writer is Programme Manager, Society for the Protection of the Rights of the Child, SPARC, Islamabad.


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