Karachi, December 11, 2023 – Advocates for anti-tobacco measures pushing for higher taxes on tobacco products inadvertently contribute to the growth of the illicit tobacco industry.
This illicit trade annually causes a substantial revenue loss of Rs.240 billion to the national exchequer, posing a threat to public health by providing inexpensive cigarettes to the economically vulnerable population, which struggles with economic hardships and lacks access to healthcare facilities.
Rather than urging the government and authorities to combat illicit tobacco manufacturers through an effective track and trace system, these organizations are encouraging the government to raise tobacco taxes. This approach exacerbates the existing issue instead of addressing its root cause.
While the intention behind higher taxation is to discourage smoking, the reality is that elevated taxes on legal tobacco inadvertently enhance the attractiveness of cheaper illicit alternatives. “With more than 50 percent of the market flooded by illegal cheap cigarettes, any increase in tax rates on legal tobacco only makes illicit alternatives more appealing, particularly for the economically disadvantaged population,” emphasized Osama Siddiqui, a microeconomics analyst.
Siddiqui highlighted the alarming aspect that such a strategy not only fails to address the core problem but also disproportionately impacts the low-income segment, already susceptible to economic hardships and lacking adequate access to healthcare facilities.
Instead of solely advocating for increased taxation, Siddiqui suggested that these organizations could redirect their efforts towards pressuring the government to take stringent action against illicit tobacco manufacturers. He emphasized that incorporating these entities into a comprehensive track and trace system could significantly curb the illicit trade, mitigating substantial revenue losses and simultaneously safeguarding public health.
The inadvertent consequences of advocating for higher tobacco taxes are contributing to the flourishing illicit tobacco trade. To address the core issue, a shift in focus towards implementing effective measures, such as a comprehensive track and trace system, is essential. This approach not only protects public health but also ensures a more targeted and holistic solution to combat smoking addiction without disproportionately affecting the economically vulnerable population.
