Health tax on tobacco industry can add Rs250 billion to national exchequer

Islamabad: Activists on Thursday demanded the government to implement ‘health tax’ on tobacco industry saying it can add Rs250 billion in national exchequer in next three years.

They were speaking at a pre-budget session with media on Senate Committee recommendations to increase tobacco tax. The session was organized by Society for the Protection of the Rights of the Child (SPARC).

Speakers of the seminar urged government to frame a solid policy on tobacco taxation and implement the recommendations of Senate Standing Committee of eliminating third slab of cigarettes. Participants also highlighted the fact that despite inflation and increase of prices on all commodities, the prices of cigarettes did not increased keeping the cigarettes and other tobacco products within the reach of the children’s buying power.

The speakers said that Pakistan’s population consists of 60 per cent youth below the age of 25 where alarming statistics of young people getting addicted and at risk of tobacco consumption calls for strict tax reforms and checks for selling cigarettes to the minors particularly.

Executive Director, SPARC Sajjad Ahmed Cheema said that it is estimated that if the government eliminates the lowest tax tier and brings the FED of the lower tier to Rs40, it would raise significant additional tobacco tax revenue of Rs.18.4 billion—a 20.9 per cent increase from current tobacco tax revenue.

He said that as an added advantage, it would reduce cigarette consumption by 12.6 per cent and reduce the number of smoking-related deaths among current and future smokers by 3.1 per cent (a reduction of about 0.35 million people every year).

“Considering the fact that increase in dollar price has an effect of the increase in the price of basic goods for living like fruits and vegetables etc., whereas on the other hand, the prices of tobacco products are the same. We are still unable to get why this sector being ignored for an imposition of taxes who has been contributing a lot to increase the health cost and burden of diseases on our Nation,” he said.