Cigarette consumption is increasing in developing countries and Pakistan is no exception and has witnessed an upsurge in recent years and instead of generating additional revenue from the cigarette industry, the country has incurred billions in losses, both in terms of revenue and increased health costs.
Pakistan is one of the top tobacco- consuming countries standing at the 7th position globally and 1st in the WHO Eastern Mediterranean Region (EMR) in terms of the number of tobacco product users.
According to an estimate, the country produces more than 60 billion sticks of cigarettes every year but when it comes to revenue the Federal Board of Revenue (FBR) data shows all tax collection targets were missing during the last seven years.
The total loss, estimated by a number of research studies including one by the Sustainable Development Policy Institute (SDPI), during the last seven years has been estimated at Rs 567 billion.
The World Health Organization (WHO) emphasizes the need to safeguard tobacco tax policies from vested interests of cigarette companies for effective development, implementation, and enforcement of public health initiatives. However, it did not happen in Pakistan.
The study also highlighted how high and middle-income countries successfully imposed high taxes on cigarette products to decrease consumption and increase government revenues, but the fact remains that Pakistan still lacks a clear strategy on using cigarette taxation and prices as a public health tool.
Pakistan has signed Framework Convention for Tobacco Control (FCTC), the multilateral treaty initiated by World Health Organization (WHO) in 2004 to curb smoking.
Two decades post FCTC, the cigarette industry is influencing decision making and the country stands at the losing end – loss of revenue and extra burden on the country’s fragile healthcare system.
World Bank has also revealed, in a report titled “Pakistan: Overview of Tobacco Use, Tobacco Control Legislation, and Taxation,” that the decline in government revenue in the 2016-2017 fiscal year was carefully planned by the powerful cigarette industry.
According to details, the cigarette industry convinced the government to introduce third-tier (for taxation) to curb illicit trade. The industry cited exaggerated numbers of illicit trade and consequently, with the introduction of the third tier in the tobacco taxation regime, the revenues fell from Rs 114.27 billion in 2015-16 to Rs 83.76 billion in 2016-17.
When it comes to burden on the health sector, Pakistan Institute of Development Economics (PIDE) provides insight into the overall costs linked to smoking-related diseases and deaths in Pakistan for the year 2019.
The analysis points to an additional financial burden of Rs 615.07 billion ($3.85 billion), with indirect costs such as morbidity and mortality constituting a significant 70% of the total expenses.
This highlights the pressing need to reassess the industry's sway on national policies, emphasizing the importance of balancing public health and economic stability.
