Home »Taxation » Pakistan » Government can fund health programmes through tobacco tax reforms: experts
Tobacco tax reforms and additional revenue collection from the product can help the government fund its different health programmes, especially in the rural areas of the country including tobacco control programmes. Experts and speakers said this while addressing a seminar on "Pre-budget session on tobacco tax" that was organised by Society for the Protection of the Rights of the Child here on Saturday.

They also shared different proposals and recommendations for tobacco tax reforms, urging the government to include them in the upcoming budget for fiscal year 2019-20. "The tax reforms will help generate additional total tax revenue of about Rs 205.9 billion over three years, equivalent to an average annual increase in total tax revenue of about 51 percent," said Malik Imran from Campaign for Tobacco-Free Kids.

He said if the government would adopt all their proposals, these would help reduce the government's administrative costs, simplify Pakistan's tobacco tax system and further align it with the best global practices. Furthermore, the proposals can significantly reduce tobacco use and save lives while raising significant additional tax revenue that can fund government health programmes, including tobacco control programmes, he said.

Imran also anticipated an increase in the excise tax share in the price from about 45.9 percent currently to 57.6 percent, somewhat closer to the 70 percent level recommended by the World Health Organisation. The proposed tax reform model will also contribute to significant reduction in adult cigarette consumption by almost 42 percent (about 28 billion sticks), reduced smoking prevalence by about 2.15 per person, from 10.4 percent of all adults currently to about 8.3 percent of adults after three years.

The speakers said the tax reforms will also help reduce the number of smoking-related deaths among current and future smokers by about 11 percent which is a reduction of about 1.1 million. He also added that the volume of illicit trade is very low as claimed by the tobacco industry and the data presented to the government by the industry is also challengeable.

Executive Director SPARC Sajjad Ahmad Cheema said the big tobacco industry caused a whopping Rs 153 billion loss to the national exchequer between 2016-19, by being awarded low tax rate and adjusting the prices of their most sold brands.

Almost 90 percent of all brands consumed in Pakistan were taxed as "low" tiers under the previous tax system (FY 2016-17), he said, and if their prices remain the same, most of them would have automatically been reclassified as "medium." Cheema said that loss of revenue due to introduction of 3rd Tier (low tobacco taxes) is Rs 77.85 billion from 2016 to 2019, and the revenue loss due to price adjustments is Rs 75 billion from 2018 to 2019.

Copyright Business Recorder, 2019


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