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Tax on tobacco

February 08, 2019


THE media is abuzz with what it has dubbed a sin tax or health tax to be levied on cigarette manufacturers in Pakistan. Anti-smoking activists want heavier taxation on tobacco products as they feel this decision will discourage the smoking habit. This may not be the case.

A higher taxation rate on cigarette manufacturers may persuade smokers to switch to low-priced, tax-evading products. Hence, higher taxes may encourage and create a heavier burden on the public-health expenditure.

Civil society should realise that the tobacco industry in Pakistan is among the highest tax payers in Pakistan, while a much larger number of unregistered cigarette producers are not paying any taxes and selling their product at lower prices than the minimum rates set by the government.

One holds no brief for cigarette manufacturers but before raising taxes on the few companies that pay, the government and civil society must take effective measures to reduce illegal trade of cigarettes.

Siraj Muneer Soomro

Published in Dawn, February 8th, 2019