Ministry recommends raise in tobacco taxes

Remains mute on increasing size of graphic health warnings

Islamabad

The Ministry of Health Services has suggested an increase in the Federal Excise Duty (FED) on lower slab of all brands of cigarettes from the current Rs32.98 to Rs44 per pack of 20 cigarettes. A recommendation to earmark 2% of the tobacco tax revenues for utilisation by the Prime Minister’s National Health Programme for treatment of Non-Communicable Diseases (NCDs) has also been tabled.

In separate letters to Minister for Finance and Special Assistant to the Prime Minister on Revenue, the Minister of State for Health Saira Afzal Tarar has highlighted Pakistan’s obligations under Article 6 of the Framework Convention on Tobacco Control (FCTC), which requires implementation of tax and price policies on tobacco products as a way to reduce tobacco consumption.

The letter establishes the urgency of increasing taxation on tobacco products in the upcoming budget by referring to recommendations of the technical working group on tobacco taxation. This group, which comprised experts from the Federal Board of Revenue, Bloomberg Partners, WHO, World Bank and Tobacco Control Cell, made three key recommendations: that the lower slab of all brands of cigarettes be taxed at the rate of Rs44 per pack of 20 cigarettes; that exemptions of tobacco taxes provided to Pakistan Navy, President of Pakistan, the President of Azad Jammu and Kashmir and the Governors of the Provinces, members of their families and guests be withdrawn; and that the Electronic Monitoring System be implemented on priority to monitor production of cigarettes.

Cigarette packets are categorized in lower and upper slabs. Packets of 20 cigarettes, which have a retail price of up to Rs88, are ranked in the lower slab while those with a retail price of over Rs88 are included in the upper slab. Currently, the tax rate for the lower slab is Rs32.98 and that for the upper slab is Rs74.10 per packet.

Tobacco taxes that translate into price increases are considered the single most effective option for reducing tobacco use and increasing revenues. Higher tobacco taxes save money by reducing tobacco-related health care costs. According to a research study on tobacco taxation in Pakistan, a uniform excise tax that accounted for Rs44 per pack of 20 cigarettes could reduce the number of smokers by 13.2 per cent. Moreover, the study also showed that if the tax is increased to Rs44 per pack, the revenue will go up by Rs39.5 billion, avoiding 0.65 million premature deaths caused by smoking among current smokers.

In Pakistan, tobacco is a cause of death of around 108,800 persons every year, meaning 298 deaths per day. Increasing taxes on tobacco will be critical to reducing consumption of tobacco products and saving the lives of the people of Pakistan. Equally critical on the occasion of World No Tobacco Day 2017 is the need for the Minister of State for Health to implement her longstanding announcement, which she officially made in 2015, to increase the size of pictorial health warnings on cigarette packs.

The recommendations tabled by the Ministry of Health are crucial indeed; however, a Ministry that has itself succumbed to the pressure tactics of the tobacco industry by withdrawing its decision to increase the size of graphic health warnings, is not seen as being in a strong position to tell other Ministries and government officials what they need to do to control the tobacco epidemic.