ISLAMABAD: The Islamabad-based think tank, Capital Calling, has called for rigorous adjustments to the taxation policy on cigarettes, aiming to align it with global norms.
The organization emphasized the urgent need for the government to reassess the tax framework on cigarettes, criticizing its current undervaluation of the smoking-attributable fraction (SAF) of health and social costs.
In its latest policy brief, Capital Calling highlighted that the government’s hesitation to modify cigarettes taxes stems from a flawed analysis of tax revenue benefits versus the extensive health outcomes. By neglecting the full impact of smoking on public health, the current tax policy inadvertently prioritizes fiscal gains over crucial health concerns.
The think tank argued for a tax revision that considers the substantial health costs associated with cigarette consumption. “Tobacco should no longer be seen merely as a revenue-generating commodity but as a major public health issue,” the statement read. The policy shift proposed aims not only to enhance public health but also to safeguard the economic stability that can be threatened by the long-term medical costs of treating smoking-related diseases.
According to the World Health Organization (WHO), effective cigarette tax strategies should reflect the significant health burdens — including mortality and morbidity — that tobacco inflicts on societies. Reports indicate that there are over 24 million active smokers in Pakistan, a figure that has substantial implications for both smokers and passive smokers, contributing to a national health crisis.
The statement also underscored the economic dimensions of tobacco production and sales in the country. Pakistan is identified as one of nine low-income countries collectively responsible for 90 percent of global cigarette production, turning it into a major player in an industry fraught with health implications.
Capital Calling further referenced a study by the Pakistan Institute of Development Economics (PIDE), which demonstrated the positive impact of tax structure adjustments on government revenue. The study revealed that the abolition of the third tax tier in 2019, which had allowed cheaper cigarette sales, actually led to an increase in tobacco tax contributions—from Rs 92 billion in 2016 to Rs 120 billion. This adjustment improved the tobacco sector’s contribution to total tax collections, from 2.15 percent in the fiscal year 2016-17 to 3 percent.
With these points, Capital Calling not only underscores the health imperative behind taxing tobacco but also illustrates the potential for such tax policies to contribute positively to the national economy. The think tank’s recommendations call for an integrated approach that balances economic, health, and social considerations in the crafting of tobacco tax legislation.
