Tobacco causes negative contribution to national economy

LAHORE - Increased tobacco taxation is a win-win situation for the government and the people of Pakistan provided that the government remains steadfast in its decision of increasing tobacco taxation.

This argument was raised during an event organized by the Society for the Protection of the Rights of the Child (SPARC) with the Federal Board of Revenue FBR and Elected Representatives. The event explored the economics of tobacco, the health cost burden and tactics of the tobacco industry in the presence of key journalists to gather support for the Federal Board of Revenue’s (FBR) track and trace system.

Malik Imran, Country Head, Campaign for tobacco-free kids (CTFK), mentioned that the tobacco industry caused a 615 billion rupee economic burden to our country therefore it must be taxed heavily and regularly. He mentioned that due to the government’s decision of increasing Federal Excise Duty (FED) on cigarettes in February 2023, an additional 11.3 billion FED revenue and 4.4 billion VAT revenue was obtained in the fiscal year 2022-23.

This additional revenue makes up 0.201% of our GDP which is a significant boost for a struggling economy like Pakistan. Imran stated, that the Illicit trade is an excuse used by the tobacco industry to avoid taxes. In reality, the tobacco industry practices underreporting where they hide their actual production figures to avoid taxes. Cigarette manufacturers also shift the tax burden to consumers to increase their own profitability.

Mr Rizwan Sarfraz, Additional Project Director, Track and Trace System, FBR, mentioned that the track and trace system (TTS) implemented by the Federal Board of Revenue (FBR) in Pakistan has achieved several goals. These include technology-based monitoring, increased transparency, improvement in tax compliance, and a reduction in the prevalence of counterfeit goods in the country. He mentioned that since the production of cigarette sticks decreased by 6.5% from July-December 2021 to July-December 2022 and during the same time FBR's tax collection improved by 11.75. This is a major achievement of the Track and Trace System.

Nisar Ahmed Cheema, Member National Assembly, said all stakeholders must work tirelessly to ensure that the health of Pakistanis doesn't suffer at any cost. He mentioned that FBR's track and trace system must be implemented in all companies so that important tax revenue is not lost. He also urged the parliamentarians to work for a consistent and adequate increase in tobacco taxation.

Dr Ziauddin Islam, Former Technical Head, Tobacco Control Cell, Ministry of Health, said that the annual 337,500 deaths from tobacco and 615 billion economic burdens require sustainable measures. Pakistan should increase tobacco taxes at regular intervals to reduce consumption and generate revenue.

Khalil Ahmed Dogar, Program Manager SPARC said that to protect the children from the harms of tobacco all stakeholders must cast their differences aside and unite to protect our children and youth from an industry which is causing billions of losses to the national exchequer. Increasing tobacco taxes is such a step which should be regularly implemented.