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January 13, 2019

Tobacco tax reforms to ensure better health system


January 13, 2019

Islamabad : The tobacco tax reforms will lead to inflated tax returns and improved health system in the country, insisted speakers at a conference here.

The Society for the Protection of the Rights of the Child, Human Development Foundation and Pakistan National Heart Association held the event on the 'new model on tobacco tax reforms' at a local hotel.

Addressing to participants Malik Imran Ahmad of the Campaign for Tobacco-Free Kids, Pakistan Office, shared the new model of tobacco tax reforms.

He said the model would contribute to significant reduction in adult cigarette consumption by almost 42% (about 28 billion sticks); reduced smoking prevalence from 10.4% of all adults currently to about 8.3% after three years, and reduction in the number of smoking-related deaths among current and future smokers by about 11%.

The experts on tobacco taxation have come up with a concrete proposal for tobacco tax reforms and recommend solutions to the federal government on short term (Fiscal Years 2019/20): medium term (FY 2020-21) and long term basis (FY 2021-22).

According to the calculations, it is predicted that the tax reform would generate significant additional total tax revenue of about Rs205.9 billion over three years, equivalent to an average annual increase in total tax revenue of about 51% (or about Rs32.3 billion per year).

The experts also anticipated an increase in the excise tax share in the price from about 45.9% to 57.6%, somewhat closer to the 70% level recommended by the World Health Organisation.

The participants expressed confidence that recommendation for tobacco tax reforms if adopted by the government will prove to be an effective policy that will simplify Pakistan’s tobacco tax system and thus, reducing the government’s administrative costs (improve enforcement and compliance) and further align it with best global practices.

They said the proposal could significantly reduce tobacco use and save lives while raising significant additional tax revenue that can fund government health programmes, including tobacco control programs, a “win-win” for tobacco control.

The participants demanded the government regularly increase the excise tax to account for inflation and income growth and reduce cigarette affordability, harmonise all taxes across tobacco products, and fully implement the protocol to eliminate illicit tobacco trade and align the protocol with the legislation on prosecutions and sanctions for tax evasion.

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