Why tobacco taxes are essential

Given the high health costs of tobacco use, reducing smoking rates would lead to substantial health gains

Tobacco kills half of its users as has been indicated by the World Health Organisation (WHO). Tobacco use is the single largest preventable cause of death in the world. It kills 8 million people every year. More than 7 million deaths are a direct result of tobacco use, while 1.2 million deaths are due to secondhand smoke.

In Pakistan, tobacco is a cause of death of around 160,100 persons every year. The youth of Pakistan are being targetted by the tobacco industry so that “replacement smokers” can be recruited. Around 1,200 Pakistani children between the ages of 6 and 15 start smoking every day.

According to Global Adult Tobacco Survey, 2014, almost 24 million (19.1 percent) adults currently use tobacco in any form. That accounts for 15.6 million (12.4 percent) adults who currently smoke tobacco, including 3.7 million adults using water pipes, hookah or shisha and another 9.6 million (7.7 percent) adults who use smokeless tobacco.

Smokers are two to four times more likely than non-smokers to develop coronary heart disease. Low levels of tobacco exposure, with infrequent smoking or secondhand smoke, increase the risk of inadequate cardiac health. Male smokers are 23 times more likely, and female smokers are 13 times more probable, than non-smokers to develop lung cancer. Smoking causes 80-90 percent of deaths from lung cancer.

According to Population and Housing Census, 2017, total population of Pakistan was 207.77 million. This shows a significantly high number of youth in the country.

The Economic Cost of Tobacco-Induced Diseases in Pakistan, recently released by the PIDE, uncovers shocking and eye-opening statistics. The total costs attributable to all smoking-related diseases and deaths in Pakistan for 2019 are Rs 615.07 billion ($3.85billion). This figure is five times higher than the tobacco tax ever received in Pakistan.

This report reveals that a “major share (71 percent) of the smoking-induced costs come from cancer, cardiovascular and respiratory diseases. The total smoking-attributable costs are 1.6 percent of the GDP, whereas the smoking-attributable costs of cancer, cardiovascular and respiratory diseases are 1.15 percent of the GDP”.

It is no secret that taxes are effective means for reducing tobacco consumption. Tobacco use creates a substantial economic burden on the population at large. Higher direct health costs linked with tobacco-related disease and higher indirect costs related to premature loss of life, disability due to tobacco-related illness, and productivity losses create significant negative externalities of tobacco use.

It is an established fact that “increases in tobacco taxes decrease tobacco use.” Indeed, raising taxes on tobacco is one of the most effective ways to reduce tobacco use. As reinforced by WHO’s framework convention on tobacco control (FCTC) that “Effective tobacco taxes not only reduce these externalities through reduced consumption and prevalence but also contribute to the reduction of governments’ expenditures for the health care costs associated with tobacco consumption.”

These recommendations are based on technical testimony, best practices and the understanding of countries that have efficiently implemented tobacco control policies in ways that have improved their people’s health. Article 6 of the FCTC obligates member countries to adopt tax and price policies to reduce tobacco use. Prices affect virtually all commodities, including measures of cigarette use. This also influences per-capita consumption, smoking rates and the number of cigarettes smoked daily.

There are 28 countries in the world which already have imposed Health Levy as Sin tax on hazardous and harmful products. These include: Denmark in 1930, Hungry in 2011, Philippines in 2013, France in 2013, Mexico in 2013-14, Thailand in 2016, the UAE in 2016, Saudi Arabia in 2017 and the UK in 2018. Imposing Health Levy/ Sin Taxes on such harmful products is an established approach to reducing smoking, particularly among teenagers and low-income people.

Given the high health costs of tobacco use, reducing smoking rates would lead to substantial health gains. Moreover, youth and lower-income people would benefit greatly from improved health.

In its meeting held on June 18, 2019, the federal cabinet directed that the Finance Division, in consultation with Ministry of National Health, shall make necessary arrangements to ensure that the proposed health tax on cigarettes and carbonated drinks through Finance Bill, 2019 and shall be utilised for Insaaf Health-Card initiative. Unfortunately, this dream could not come true as the Federal Health Levy Bill 2019 did not become part of the Finance Bill, 2019.

Since then, there has been no good news on this issue. The government of Pakistan has to approve this bill at the earliest. Health levy on cigarettes and sugary drink has the possibility to reduce the number of smokers, carbonated drinks users, particularly youth, the amount of tobacco/sugar consumed, and the costs curtailed from smoking-related illnesses/obesity and other diseases, including premature deaths.

The proposed health levy was aimed at dissuading people from engaging in socially harmful activities and behaviours (smoking and use of sugar drinks). They also provide a source of revenue for governments in a situation where the economy of the country is trying to breathe hard in the wake of Covid-19. The revenue expected will help Pakistan pay for the costs resulting from the mass Covid-19 vaccination and treatment and management of diseases.

It can be safely concluded that the anticipated health levy on tobacco and sugary drinks will prove one of the main policies to support the government’s intention to provide public healthcare through sustainable health financing across Pakistan.

The writer is global tobacco and public health consultant. He is based in Islamabad

Why tobacco taxes are essential