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Speakers Urge Increased Tobacco Taxation to Protect Youth and Boost Economy

By: Maleeha Irfan

ISLAMABAD: At a recent policy dialogue organized by the Society for the Protection of the Rights of the Child (SPARC), speakers emphasized the urgent need to increase tobacco taxation for the fiscal year 2024-25. Highlighting the dual burden posed by the tobacco industry, they pointed out its significant contribution to the economic strain and health costs in Pakistan. The proposed tax hike is seen as a crucial step to safeguard the economy and protect the youth from the harmful effects of tobacco use.

Murtaza Solangi, Former Caretaker Minister of Information and Broadcasting of Pakistan said that low cigarette prices are the reason why children and youth initiate smoking. He added, that smoking-related illnesses and deaths incur substantial economic costs in Pakistan’s GDP every year. These increasing health cost burdens encompass healthcare expenses, productivity losses due to illness and premature death, as well as other indirect economic impacts.

He further added that the tobacco epidemic requires comprehensive strategies encompassing public health interventions, strong tobacco control policies, and awareness campaigns. By tackling tobacco use, Pakistan can mitigate economic losses associated with smoking-related illnesses, potentially alleviate the burden on its healthcare system, and keep young people safe from the harms of tobacco use.

Malik Imran Ahmed, Country head of Campaign for Tobacco-Free Kids (CTFK), shared in detail that the recent Federal Excise Duty (FED) reforms on tobacco have demonstrated promising results in terms of revenue generation. Collections from July 2023 to January 2024 have already surpassed PKR 122 billion, with projections for the full year exceeding PKR 200 billion, marking a substantial increase compared to previous fiscal years.

Furthermore, these reforms are expected to generate an additional PKR 60 billion in General Sales Tax (GST) on cigarettes for the fiscal year 2023-24. The combined impact of FED and GST is estimated to be around PKR 88 billion, indicating a remarkable relative growth of nearly 49% compared to the previous year.

Imran added that in addition to the financial benefits, these reforms play a crucial role in promoting public health by reducing tobacco consumption and potentially recovering 17.8% of the total healthcare costs associated with smoking in Pakistan. However, maintaining the current rate could result in a decrease in health cost recovery, highlighting the urgent need for further action.

To achieve similar levels of health cost recovery observed in 2023-24, a 37% increase in the FED rate for the upcoming year is recommended. This tax proposal presents a clear ‘win-win’ scenario, benefiting both the government and the people of Pakistan by enhancing revenue and safeguarding public health.

Prof. Dr. Matiur Rehman, Dean of Allied Healthcare Sciences, Lung Diseases and Tobacco Control, Health Services Academy said, that tobacco-related illnesses also known as non-communicable diseases such as cancer, diabetes, and heart diseases contribute to over 160,000 deaths annually in Pakistan. These deaths not only affect individuals but also have long-term impacts on families, communities, and the healthcare system.

Dr. Khalil Ahmad Dogar, Program Manager of SPARC, said that the children of Pakistan are being targeted by the tobacco industry so that “replacement smokers” could be recruited. Around 1200 Pakistani children between the ages of 6–15 years start smoking every day. Khalil added that all stakeholders must cast their differences aside and unite to protect our children and youth from an industry that is causing billions of losses to the national exchequer.

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