The International Monetary Fund’s (IMF) recommendations for restructuring tobacco taxation in Pakistan has garnered support from health activists.
An activist, during an event titled Fuelling Economic Growth through Increased Tobacco Taxation, urged government to transition to a single tier tobacco taxation system, while eliminating the second tier.
Organised by the Society for the Protection of the Rights of the Child (SPARC), the interactive session was held in Islamabad with Campaign for Tobacco Free Kids (CTFK) Country Head, Malik Imran Ahmed, highlighting the alignment between the global lender’s recommendations and ongoing discussions with Pakistan.
At the session, the strategic move was deemed essential not only for boosting revenue but also for relieving the healthcare cost burdens imposed by tobacco-related illnesses.
These discussions aim at tackling the nation’s fiscal and external sustainability weaknesses while fostering economic recovery and inclusive growth. A key component involves strengthening public finance through gradual fiscal consolidation, broadening the tax network, and improving tax administration to enhance debt sustainability.
Ahmed emphasised the urgent need to tie these objectives with tobacco taxation, stressing the imperative of reforming Pakistan’s cigarette taxation system.
He further underscored that revitalising Pakistan’s cigarette taxation system transcends mere fiscal considerations. It is a matter of urgent public health concern, he added.
Despite the substantial taxes imposed on cigarettes, Ahmed lamented that the revenue generated falls short of covering the healthcare costs incurred due to smoking-related illnesses.
In the fiscal year 2022-23, taxes covered a meager 16% of these expenses, indicating a significant decline from 19.5% in 2019.
Dr Khalil Ahmad Dogar, programme manager at SPARC, underscored the alarming prevalence of tobacco use in this country. With approximately 31.9 million adults aged 15 years and above reported as current tobacco users, constituting nearly 19.7% of the adult population, the dire consequences of tobacco consumption extend far beyond individual health.
Dr Khalil reiterated that over 160,000 deaths are attributed to smoking-related illnesses annually, amounting to a staggering 1.6% of the nation’s GDP each year.
He stressed the urgent need for immediate action to bridge the gap between tobacco tax revenue and healthcare costs, advocating for the adoption of a Single Tier Tobacco Taxation System, as recommended by the IMF, as a means to not only bolster revenue but also to alleviate the health and economic burdens associated with tobacco consumption.
