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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1 Comment

  1. samir ssardana May 03, at 23:48

    The Solution to the Pakistani Power Imbroglio – Part 4 Doom No.1 - Pakistan has failed to avail of the perks of the doom of the IPP/RPP scam Solution No.1 to Doom No.1 - The doom of the IPP/RPP,have not been encashed by the Pakistani state.The COVID is a divine opportunity.Besides the case for a debt waiver,seizure of power assets,making IPP/RPPs forfeit clauses of the PPA ,setting up Saudia refineries and power plants - the key opportunity, is to justify the thrust,into N-Power. This is the best time to strike a deal for N-Power - with the disaster in the world economy,on account of COVID.The benefits are strategic - besides the obvious financial and economic advantages to the state.dindooohindoo The Solution to the Pakistani Power Imbroglio – Part 5 Doom No.1 - Liquid fuel and coal based power plants,for base and peak load power - instead of N-Power Solution No.1 to Doom No.1 - Pakistan has to sift to N-Power,as it is the cheapeast and low to Nil risk option,from all angles.The only contingency,is the "water quotient",as in Fukushima - the water from the sea,and the need of the water,as a coolant,moderator and conductor.Unless Afghanistan is partitioned,no energy corridor passing through it,will be bankable or insurable,or risk free. Similarly, no energy corridor through Iran,will be unviable (from the point of UN Sanctions/ Trade sanctions/geo and financial risk). When Oil prices are at 20 USD - there is demand destruction, and so,power availability and fuel availability,is not an issue,as there is no power demand - and the state has to pay the capacity charges to IPP/RPPs.At high oil prices,IPP/RPP power costs are high,even if the power demand is muted (as the oil price,prices in political/geo/logistics risks - and not an uptick in demand or economic activity),and even,if the power demand is high - there is no international competitiveness,w.r.t the exports,as other nations,have lower power costs and export sops. Further,in the event of any Conflict in the Persian Gulf,which is certain,in a block of,say 3-5 years,there is a supply risk,w.r.t fuel logistics,to Pakistani ports, and especially,the liquid fuel cargos - besides the risk premium,in the fuel prices,and the sea freight and insurance.1 disaster in the Persian Gulf,will wipe out the economic activity,of a few decades in Pakistan. Hence,the Pakistan state should use N-power,and there are several nations,which will supply the tech and reactors,at ultra low costs,with 40-50 year repayment tenors, and will also,in some cases,supply the N-plant free of cost,and operate the same - to earn profits,from sales to Grid.Several nations are exiting N-power,and so, their technologies and reactors,are useless - as is,their stockpile of LEU and DU.They will be glad,to sell their LEU and DU. Some of the Pakistani enrichment facilities and the NFC,are already under IAEA inspection - but if they are to kept secret,enriched uranium or the fuel rods,can be obtained from PRC,or France or Russia etc..Ideally,the yellow cake should be processed into UF6, and enriched in Pakistan - as that provides the basis,for the dramatic upgrading,of the entire nuclear fuel supply chain,in Pakistan.In such cases,some ore suppliers require the return of DU - as per a set norm.Return of some of the DU,is good,as it obviates the storage risk. Power is a fungible commodity - but the uranium ore,is not.So the uranium can be,within limits,diverted to the HEU program.From the DU stock of a batch,it is possible,via scientific testing,to trace the COO of the ore - but even,this minutae in uranium accounting,can be navigated. As a matter of N-Fuel supply risk,in the current scenario,it would not be unreasonable, to ask for several years of LEU - which insulates the nation,from fuel supply risks (of price,quality and quantity) - which is the only risk - and so,you have have a fixed price fuel supply,with a viable commercial use,of the DU - in the military - and a covert generation of HEU - which makes the fuel cost - nil to negative. It is irrelevant,that Pakistan has uranium reserves -as it is in the strategic interest of the state,to understate the quality and quantity,of the ore, and generate as large, a stockpile as possible.Further any mining,is the extraction of poison,from the earth's core,and bringing it onto the earth's surface,or into contact with water acquifiers and bodies.It is best that that this poison,is dumped,in 3 rd countries. There is also no DU disposal risk,as nations like USA/France/Russia and PRC,need to worry about it,far more.Sooner or later,these nations will need to make DU dump farns,in some nation (with exceptional security) - and the excess DU in Pakistan,can be dumped there - if the Pakistani ordinance factories,cannot use the DU (which is extremely unlikely). Lastly,there is no security risk,to the N-Power plants - as a gas,naptha/liquid fuel power plant,can be blown to smithreens,at the fuel dumps or the plant or the pipelines - by just a elemenary ED, and not even a IED or a Grenade.On the other hand,all these toys,have no impact on a N-Power plant.The reactor core,can survive a tactical N-Strike. Even if there is human sabotage,it will have no impact (although a liquid fuel plant,can be blown to bits) - so long as the coolants,moderators and condutors,are working.Fuku occurred,because the pumping system which evacuated the heat,from the reactor - just collapsed.Chernobyl also blew up,as the core temperature in the reactor core kept rising,as the control rods failed,and the reactor could not be cooled (for whatever reason) - so it just blew up.Simple ! It is said that the sound of the enriching centrifuges,capture the recitation of "some specific ayats of the Quran",strung and recited at a certain speed and frequency.It is the divine calling.

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