ISLAMABAD – Experts and health advocates are supporting the International Monetary Fund’s (IMF) recommendation to combat Pakistan’s high cigarette consumption rates.
The IMF suggests transitioning to a single-tier tax structure and increasing tobacco product taxes to reduce cigarette consumption. The IMF’s Technical Assistance Report, titled “Pakistan Tax Policy Diagnostic and Reform Options,” shows that cigarette consumption in Pakistan has decreased by 20-25% following a significant increase in tobacco product prices.
This decrease in consumption reinforces the need to align tax policies with the World Health Organization’s (WHO) guidelines. Health activists are urging the government to switch to a Single Tier Tobacco Taxation System and eliminate the existing dual-tier system for local and imported cigarettes.
By implementing uniform excise rates and bridging the gap between local and foreign cigarette manufacturers, Pakistan can streamline its taxation system and reduce healthcare costs associated with tobacco-related illnesses. Pakistan, the seventh-largest tobacco-consuming country globally, signed the Framework Convention for Tobacco Control (FCTC) in 2004.
The WHO emphasizes the importance of robust tax measures to reduce tobacco consumption, particularly in low and middle-income countries, by elevating tobacco prices. However, the cigarette industry is opposing tax hikes, disregarding the health consequences associated with the affordability of cigarettes.
The influence of multinational corporations has led to a staggering loss of 567 billion rupees in revenue over the past seven years. A study by the Pakistan Institute of Development Economics (PIDE) reveals that smoking-related diseases and deaths cost Rs 615.07 billion ($3.85 billion) in 2019, amounting to 1.6% of the GDP.
