Pakistan’s destabilised GDP and Tobacco taxation

April 15, 2019 Opinion , OPINION/NEWS , Pakistan

A B E D K A Y A L I photo

 

By

Hammad Hassan

 

 

In Pakistan cigarette prices are among the lowest in the world. Pakistanis are aiming to raise awareness of this and are proposing a maximised tax on tobacco consumption to decrease its demand.

 

Pakistan is a signatory of the World Health Organisation (WHO) Framework Convention on Tobacco Control (FCTC) which demands an increase of the excise share in the price to a minimum of 70% on cigarettes, whereas in Pakistan it is only 45.9%. In India, Bangladesh, Sri Lanka, Philippines and Europe the tax on tobacco products is nearly 70 percent.

 

Smoking kills over 100,000 people annually in Pakistan according to the country’s Ministry of Health. The World Health Organisation estimated that worldwide about 90% of all lung cancer, 75% of chronic bronchitis and emphysema, and 25% of ischemic heart diseases in men under 65 years of age are due to smoking. Epidemiological studies show that tobacco ultimately kills 33 to 50 percent of all people who use it (WHO).

 

According to WHO, the lower prices of cigarettes have a direct impact in smoking-related deaths and diseases, Pakistan being one of 15 countries worldwide with a heavy burden of tobacco-related ill health.

 

From the mid 1990s to 2005 cigarette prices tripled in France. The rates of death among males from lung cancer in that country fell by 50% during the same period.

 

In July 2015 the UN recognized that “price and tax measures on tobacco can be an effective and important means to reduce tobacco consumption and health-care costs.”

 

Higher prices in Pakistan, as directed by WHO, would reduce cigarette consumption by 42% and will reduce the number of smoking-related deaths by 11%.

 

In Pakistan the third tier on cigarettes is a disaster, the revenue loss due to the three-tier structure being Rs 42.5 billion. The multinational tobacco companies in the country are lobbying for a 3rd tier on cigarettes which will lower FBR revenue and increase the health burden on millions. Pakistan can generate over 200 billion more revenue in 3 years if they impose the proper taxes on cigarettes.

 

Pakistan’s GDP growth rate slowed down to 2.7 percent in F19-20. As the country’s growth is slow, maximising tax on tobacco will help increase the earnings of the government and will help GDP stabilization. Sanaullah Ghumman from PANAH said that the Federal Board of Revenue (FBR) reduced the tobacco industry tax from 32 percent to 16 percent.

 

According to the study conducted by SDPI on the national treasury versus public health 2018-19, it was learned that there were above 23.9 million tobacco users in the country, from which 125,000 are dying every year due to tobacco inducted diseases.

 

It is therefore time to act and for the Government to increase taxes on tobacco products to lower the number of smoking-related deaths in the country and stabilise the economy.

 

Not only should cigarette prices be increased but the Government should also take strategic steps to prevent smoking accessories at educational institutions, not to mention the number of smokers badly increasing in colleges and universities all over the country.

 

 

 

 

Hammad Hassan

Hammad Hassan is a a Broadcast Journalist and Producer at Hum News. He has been working as a Journalist since 2011 and is also a social media activist.

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