Tobacco industry caused 153 billion loss to national exchequer

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By: Asim Nawaz Abbasi

ISLAMABAD, April 2019: Tobacco not only causing 480 deaths per day in Pakistan but also the Industry caused a whopping 153 Billion Rupees loss to the National exchequer between 2016-19, by being awarded low tax rate and adjusting the prices of their most sold brands.

Documents available with ‘The Dayspring’ reveals that almost 90% of all brands consumed in Pakistan were taxed as “low” tiers under the previous tax system (FY 2016-17). If their prices had remained the same, most would have automatically been reclassified as “medium” (89% of them). However, we find that Big Tobacco companies made deliberate adjustments in prices resulted in a significant price reduction, causing in 88% of the market being taxed at the new lowest rate in the current tax system.  

After the introduction of third tier, around 160 Billion cigarettes were produced between May, 2017 to March; 2019. Big tobacco companies share 75% of the total market, which means they were able to sell 120 billion cigarettes in the same period.

Loss of Revenue due to introduction of 3rd Tier (low tobacco taxes) is 77.85 billion rupees from 2016 to 2019.  Loss of Revenue due to Price Adjustments is 75 billion rupees from 2018 to 2019.

Malik Imran Ahmad a lawyer and anti tobacco activist while talking to The Dayspring said that Government should implement senate committee’s recommendations to strengthen the tax system:  Regularly increase the excise tax to account for inflation and income growth and reduce cigarette affordability; harmonize all taxes across tobacco products; and fully implement the Protocol to Eliminate Illicit Tobacco Trade, particularly the measures for supply chain control, such as license, tracking and tracing and record keeping, and align the Protocol with the legislation on prosecutions and sanctions for tax evasion. 

“Youth and specially school going children are the main targets of tobacco industry right now, it is the responsibility of the state to control the increase of smoking among children by imposing heavy taxes on tobacco industry” Malik Imran added.