Health Experts Recommend 40% Increase in Tobacco Tax

Health Experts Recommend 40% Increase in Tobacco Tax – Health experts have urged the Federal Board of Revenue (FBR) to implement a 40% increase in tobacco taxes in the budget for the fiscal year 2024-25. This proposal aims to reduce tobacco consumption, enhance government revenue, and address the significant health costs associated with smoking.

During a recent pre-budget seminar titled “Optimizing Tobacco Taxation in Pakistan,” experts presented their proposal to the government. They emphasized the dual benefits of such a tax increase: curbing smoking rates and generating substantial revenue. The proposed tax hike is expected to boost government revenue from Rs 240 billion to an estimated Rs 336 billion. Concurrently, the health costs linked to smoking are projected to decrease from Rs 615 billion to Rs 418.2 billion, narrowing the gap between revenue and health expenditures to Rs 82 billion.

Muhammad Asif Iqbal, Managing Director of the Social Policy and Development Centre (SPDC), highlighted the significant impact of price changes on smokers’ behavior. He pointed out that tobacco taxation has immense potential to deter smoking in Pakistan. He noted that the recent increase in the Federal Excise Duty (FED) on tobacco products led to a 19.2% decline in cigarette consumption, demonstrating the effectiveness of higher prices in reducing smoking rates.

Former Caretaker Minister of Information and Broadcasting, Murtaza Solangi, emphasized the importance of unity among stakeholders in combating the tobacco epidemic. He called for collective action to safeguard children and youth from the harmful effects of tobacco, which he described as causing substantial financial losses to the national exchequer. Solangi advocated for regular increases in tobacco taxes, citing low cigarette prices as a key factor driving smoking initiation among young people.

Malik Imran Ahmad, Country Head of the Campaign for Tobacco-Free Kids (CTFK), supported the recommendation for higher tobacco taxes. He highlighted the World Health Organization’s (WHO) endorsement of high tobacco taxation as a crucial strategy in reducing tobacco consumption. Ahmad argued that the tobacco industry in Pakistan could absorb a 40% tax increase and noted that international bodies like the International Monetary Fund (IMF) and the World Bank have advised Pakistan to adopt a single-tier tax structure for cigarettes. Despite efforts to raise taxes, cigarette prices in Pakistan remain low compared to international standards, sustaining high consumption levels.

By adopting these proposed tax reforms, Pakistan can align its tobacco taxation policy with global best practices and make it more effective in reducing smoking rates. This approach not only promises to curb tobacco use but also to generate significant revenue that can be reinvested in public health initiatives.

Moreover, Ahmad pointed out that aligning cigarette prices with those in other countries would further discourage smoking. The affordability of cigarettes in Pakistan is a critical factor contributing to high smoking rates, especially among the youth. Increasing taxes to make cigarettes less accessible financially is a proven method to deter initiation and encourage cessation.