Cigarette packs will now be 10 rupees more expensive as the government has added a health tax.
On Thursday, the prime minister approved a plan to increase taxes on cigarettes in the budget for next year, 2019-20. The idea is for the government to earn more and discourage smoking.
Babar Bin Atta, the prime minister’s focal person on polio eradication, told SAMAA TV on World Anti-Tobacco Day Friday that the previous government was helping the tobacco industry and collecting more taxes in return. He said their policies, such as third-tier taxes imposed in 2015 and 2016, benefited the tobacco industry.
The government had divided tobacco taxes into three tiers. The third tier was taxed the least and resulted in the production of more cigarettes. Atta claimed the government was able to collect more revenue through this.
The government has now imposed heavier taxes on cigarettes and the revenue collected from this will be used to provide healthcare services, according to Dr Zafarullah Mirza, the state minister for national health service, regulations and coordination.
According to a 2013 study by the University of Illinois at Chicago Institute for Health Research and Policy, over 22 million (19%) Pakistani adults over 18 years use some form of tobacco. The experts said that: “Cigarette prices in Pakistan are among the lowest in the world.” Cigarette excise taxes in Pakistan account for just over half of the price paid by users. “This is below the level in countries that have taken a comprehensive approach to reducing tobacco use, where excise taxes account for 70% or more of the retail price,” their report said.
The experts said that a change in the tax structure in 2013 was one of the first steps to simplifying Pakistan’s tobacco taxes. If there is a tax of Rs31.2 per pack the estimate is that it will lead to over half a million Pakistani cigarette smokers to quit smoking. At the same time, the tax increase will generate over 27 billion rupees in new cigarette tax revenues, the experts estimated.
The cigarette market in Pakistan is highly concentrated with two companies controlling 98% of the market: Pakistan Tobacco Company, a subsidiary of British American Tobacco and Philip Morris Pakistan Ltd.