Health experts call FED increase on cigarettes mandatory to control consumption

ISLAMABAD - Health experts are concerned about the rising economic and public health costs due to an increase in cigarette consumption in Pakistan. They have called for implementing the World Bank's recommendation to increase the Federal Excise Duty (FED) on cigarettes.

Amjad Qamar, Director of the Center for Research and Dialogue (CRD), believes that increasing the FED on cigarettes can help control the steady rise in consumption and ensure a healthier future for the country's youth. He also mentions that Pakistan is one of the largest tobacco-consuming countries and that low prices of cigarettes are a significant contributor to this fact.

Succeeding governments' taxation policies have failed to generate revenue and curb the high smoking rate. This is due to policies often manipulated by industry giants, particularly multinational companies. According to the Federal Board of Revenue (FBR) yearbooks, the country has lost Rs 567 billion in revenue during the last seven years.

A study conducted by the Pakistan Institute of Development Economics (PIDE) found that the cost of smoking-related diseases and deaths was Rs 615.07 billion ($3.85 billion) in 2019, or 1.6% of the GDP.

Malik Imran Ahmed, Country Director of Campaign for Tobacco-Free Kids (CTFK), referred to the World Bank's report, titled 'Pakistan Development Update,' which suggests that a significant revenue gain of 0.4 percent of GDP (Rs. 126 Billion) could be achieved by applying the current rate on premium cigarettes (Rs. 16.50 per cigarette) to standard cigarettes as well. This measure can provide potential economic and health benefits.

Malik Imran added that aligning cigarette taxation with the World Bank's recommendation is a crucial step in safeguarding the health and well-being of Pakistan's children. Higher excise duty on cigarettes deters smoking and generates much-needed revenue for essential public services.

The International Monetary Fund (IMF) has recommended Pakistan to overhaul tax machinery and to tax non-essential items, including cigarettes, to boost revenue and improve public health. The IMF has suggested the government introduce a single-tier tax structure alongside a significant increase in taxes on tobacco products.

According to the IMF's Technical Assistance Report titled "Pakistan Tax Policy Diagnostic and Reform Options," the consumption of cigarettes in Pakistan has declined by 20-25 percent following substantial hikes in tobacco product taxes.