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April 4, 2020

Higher tobacco taxation stressed

Islamabad

April 4, 2020

Islamabad : Pakistan is among the developing countries with a very high tobacco prevalence and high mortality rate, where above 166,000 people die of tobacco-related diseases every year in Pakistan. Seventy per cent of those get lungs damaged due to second-hand smoke at indoor places. If these stats aren’t alarming enough, the current global pandemic of coronavirus (COVID-19) has further burdened the public health of the country, says Khalil Ahmed, manager communication at the SPARC, a civil society organisation.

According to him, smokers are at a high risk of suffering from severe symptoms of coronavirus due to an already compromised respiratory system.

"Unfortunately, the virus which has affected the entire world has no vaccine at the moment and is only expected to come 12–18 months later. The pandemic has further burdened the health care system of developing countries like Pakistan. Every rupee spent to counter this virus means that government is reducing the expenditure allocated to counter other diseases which still exist in the country."

He said Pakistan would have more funds available at hand if it wasn’t for the big tobacco industry which has not only increased the number of patients of respiratory diseases but also robbed the country of billions in taxes, by under reporting of their production, which could have been spent on health.

According to a recent report released by Social Policy and Development Centre the tobacco industry has under-reported their production by 47% and 27% in fiscal years 2016-2017 and 2017-2018, respectively. Revenue loss due to under-reporting of production was Rs37 billion.

Khalil Ahmed said the myth that tobacco industry generates large source of revenue for the country has almost become a popular belief. On the contrary, from 2016 to 2019, big tobacco industry caused a monstrous Rs153 billion loss to the Pakistan.

He said the industry enjoyed low tax rates (Rs77.85 billion loss of revenue) and adjustment of the prices of their most selling brands (Rs75 billion loss of revenue). 90% of the brands would have been taxed at higher amount if their prices weren’t adjusted.

"During the last three years, big tobacco industry has produced 75% of the cigarettes but claimed to have produced much lesser to avoid taxes.

“Increase in tobacco prices as suggested by World Health Organization will not only reduce tobacco consumption but it will also generate additional tax revenue that can fund government health programmes related to respiratory diseases and epidemics such as COVID-19,” he said.