Tobacco annihilates 1.6 % of GDP every year-taking out PKR 615 billion from the economy as health cost

TD/PR/Web Desk

Islamabad – 25 June 2021: Virtual Post Budget Session was organized to demand more taxes on Tobacco products in Pakistan on Friday. Anti-Tobacco Activists expressed disappointment on the government’s decision not to increase the taxation on tobacco products in the federal annual budget 2021-22.

Addressing the participants, Malik Imran Ahmad, Country head Campaign for Tobacco Free Kids (CTFK) stated that the smoking-attributable direct cost is 8.3 percent of the total health expenditures, which amounts to 1.6 percent of Pakistan’s GDP. In comparison, the total tax contribution of tobacco industry (120 billion in 2019) is only around 20 percent of the total cost of smoking.

He further added that the current tax structure enables the tobacco industry to sell cheaper cigarettes. Considering the economic and health costs of tobacco consumption, an increase of four to five times the current tax rate is strongly recommended. However, as a start, it is imperative that the Federal Board of Revenue (FBR) raises excise taxes to meet the WHO’s recommended threshold of 70 percent of the retail price of a cigarette pack.

Khalil Ahmed, Program Manager, SPARC, shared the low prices of tobacco products make them affordable for youth that cigarette prices in Pakistan are among the lowest in the world. The average excise tax share of 45.4 percent of the retail price is much lower than the WHO recommendation that excise tax should be at least 70 percent of the retail price. Currently, the effective excise tax rate on cigarettes is still the same as it was 5 years ago due to no change in the federal excise tax and increases in nominal income and inflation. Due to such easy affordability, around 1200 children between the ages of 6 and 15 start smoking in Pakistan every day.

Ch. Sana Ullah Ghuman, Secretary-General, Pakistan National Heart Association (PANAH) said that every year tobacco industry tries to manipulate policymakers in order to fill its coffers at expense of the lives of approximately 170,000 people who die due to diseases caused and aggravated by the usage of tobacco products.

He further added that government should have considered the growing inflation rate while finalizing the taxes on tobacco products for the fiscal year 2021-22. Due to an increase in inflation and a hike in dollar prices, the prices of basic goods for a living have increased whereas, the prices of tobacco products have remained the same for the last 4-5 years. They should have increased as well. Heavy taxation on tobacco products will not only reduce tobacco consumption and its accessibility but will also keep minors away from tobacco.

The session was organized by Society for Protection of Rights of the Child (SPARC).