ISLAMABAD – Finance Minister Muhammad Aurangzeb has offered hope to the public by announcing that the country could receive a $3 billion package from the International Monitory Fund (IMF). This package is considered vital for sustaining a falling economy.
However, Dr Aftab Madni, dean of Indus University, has emphasized the need to implement the IMF’s recommendations for tax reforms in a true spirit. He stressed that the government should not pick and choose recommendations but should follow them all.
Dr Madni highlighted that the IMF has recommended a uniform tax on cigarettes, regardless of whether they are national or multinational brands. This alone can generate billions in revenue. He stated that cigarettes are non-essential items and the government would not face any public backlash if it moves ahead as per IMF recommendations. Smoking causes diseases and deaths that must be accounted for. He added that about 9% of Pakistanis are smokers, and the volume of second-hand smoke still needs to be explored.
Dr Madni appreciated Dr Hassan Shehzad from International Islamic University Islamabad for being the only researcher whose report the IMF has cited in its recommendations for tax reforms. Dr Shehzad’s report has established a link between consumption and affordability.
Dr Shehzad quoted the Finance Minister as saying that the country’s current $3 billion arrangement with the IMF runs out in late April. Therefore, the government is seeking a long-term and bigger loan to help bring permanence to macroeconomic stability and provide an umbrella under which the country can execute much-needed structural reforms. Reports have mentioned that the cigarette industry is responsible for losing Rs567 billion to the national exchequer in less than a decade.
Dr Shehzad stressed that imposing a uniform tax on tobacco products is too little and too late, but it has to be done. He said that the Finance Minister, with his profound background in banking, understands the volume of losses that a product harmful to human health can cause. Dr Shehzad is a leading researcher in the country who has impacted policy making.
