Islamabad-based think tank, The Capital Calling, has raised alarm at the cracks in the country’s tax system, resulting into a loss of Rs567 billion to facilitate two cigarette industry giants.
Pakistan's economy is currently facing one of the worst crises in its history, it said, citing a current study conducted recently by SDPI reveals how significant national resources worth billions were lost to powerful cigarette industry giants.
A study mentions Rs567 billion losses incurred by the tobacco giants since 2017. According to the SDPI study, the Federal Board of Revenue (FBR) has failed to meet its revenue collection targets from the cigarette industry since 2017, despite halving the tax on cigarettes in the same year on the promises made by the two giants.
This manipulation, which resulted in introducing a “third tier”, has resulted in a loss of revenue amounting to Rs567 billion over the past seven years.
According to details, multinational cigarette companies pushed authorities to introduce a three-tier excise duty structure in 2017, while shifting the focus on revenue collection and ignoring adverse effects on public health. However, it was later proved that the target of collecting more revenue through the third tier was also missed and was grossly misleading.
The study has also shed light on the dynamics of the cigarette industry and its strong influence over policymakers. Researchers and analysts have demanded urgent attention and comprehensive reforms to navigate through these challenges and counter the influence of these powerful cigarette industry giants.
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 Pakistan lacks a clear strategy on taxing the sector as a public health tool.
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 said.