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Call to increase tax for reducing health hazards

By Our Correspondent
November 15, 2023
A representational image shows a person holding a cigarette between the fingers. — AFP/File
A representational image shows a person holding a cigarette between the fingers. — AFP/File

Islamabad:In a surprising turn of events, Pakistan finds itself in the global spotlight for its distinctive stance on cigarette taxes, where economic considerations clash with mounting health concerns. The country's lenient tax regulations have led to the lowest cigarette prices in the region, sparking a heated debate over the ramifications of this unconventional approach.

Pakistan's tobacco market dynamics have taken center stage as the nation stands out for remarkably low cigarette prices attributed to its lenient tax regulations. Dr. Aman Khan from Waseela Foundation sheds light on the intricacies of this unique situation, emphasizing the clash between economic strategy and the potential health fallout.

Premium and value-for-money (VFM) segments reveal stark anomalies in cigarette prices compared to regional counterparts. Premium brands are priced at a fraction in Pakistan, raising questions about the sustainability of such pricing disparities. Dr. Aman Khan explores potential economic rationales behind Pakistan's lenient tax policies, suggesting an approach aimed at maintaining affordability for a larger population segment with lower average income levels. Additionally, the significance of the tobacco industry to Pakistan's economy is a key factor, as higher taxes could jeopardize this crucial sector.

The economic benefits of lower cigarette prices collide with growing concerns about public health. Dr. Aman Khan highlights the risk of increased smoking rates, leading to higher healthcare costs and decreased overall productivity due to associated health issues. While Pakistan's lenient tax policy may offer short-term economic advantages, questions loom about its long-term sustainability. Dr. Aman Khan cautions against the potential pitfalls, emphasizing the significant public health challenges and contrasting this approach with more health-conscious tax policies in neighboring countries. A closer look at domestic tax policies reveals the impact of 'Big tobacco lobbying' on decisions made by the Federal Board of Revenue. The introduction of a three-tier system, ostensibly to curb illicit market share, resulted in substantial losses for the country. In contrast, independent decisions by the FBR, such as abolishing the three-tier structure and recent tax increases, have proven effective in boosting government revenues and discouraging tobacco use.

Pakistan's unique approach to cigarette taxes has not gone unnoticed on the global stage. Analysts and policymakers around the world are closely monitoring the situation, pondering the broader implications for both economic strategies and public health initiatives.

As Pakistan grapples with the global attention and internal debates sparked by its unconventional tax policies on cigarettes, the nation finds itself at a crossroads where economic interests collide with the imperative to address public health challenges. The outcome of this intricate balance will undoubtedly shape the future trajectory of tobacco regulations, both in Pakistan and beyond.