Health experts have put forward a compelling case for a substantial tax increase on cigarette sales as a means to deter tobacco use and promote public health.
In their proposals for the budget 2024-25, these experts have emphasized the urgent need for a significant hike in the Federal Excise Duty (FED) rate on cigarettes, aiming to create a level playing field across all cigarette brands and discourage consumption.
The collective presentation of health activists to the government, titled “Recovering Healthcare Costs and Saving Lives: An Urgent Call for a Tobacco Tax Increase in the Budget 2024,” underscores the critical importance of addressing tobacco use through effective taxation policies. The proposed tax increase is not only expected to have significant health benefits but also promises to generate substantial revenue for the government.
According to the Pakistan Tobacco Fact Sheet (2024-25), the proposed tax hike represents a ‘win-win’ scenario for both public health and government revenue. Contrary to concerns about potential increases in illicit trade, research evidence suggests that tobacco companies often manipulate production figures to influence tax policies and evade taxes, making a strong case for robust tax measures to counteract such practices.
Looking beyond the immediate fiscal year, the experts advocate for the incorporation of cost recovery principles into tobacco tax policy, ensuring that excise taxes cover a significant portion of the total healthcare costs attributable to smoking. They argue for more ambitious tax increases over the next three years to further deter consumption and maximize health benefits.
The presentation highlights the potential consequences of maintaining the current tax rate, indicating a decline in health cost recovery from 17.8% to 15.6%. This underscores the urgency of implementing substantial tax reforms to mitigate the adverse health effects of tobacco use and alleviate the burden on the healthcare system.
Tobacco consumption is a significant public health challenge in Pakistan, contributing to a range of serious illnesses and premature deaths. By raising taxes on cigarettes, the government can not only reduce tobacco-related health risks but also generate additional revenue to invest in healthcare and other public services.
As the government prepares to finalize the budget for the upcoming fiscal year, the recommendations of health experts regarding tobacco taxation merit serious consideration. By implementing ambitious tax increases on cigarettes, Pakistan has the opportunity to safeguard public health, reduce healthcare costs, and enhance overall well-being for its citizens.