ISLAMABAD: Health activists on Wednesday presented a simulation model on tobacco taxation claiming that the government has earned Rs15.7 billion since increase in taxes on cigarettes.

Moreover they claimed that the production of cigarettes has been decreased by 37 percent but revenue has been increased by 11pc. The track record shows that whenever the government increased tax, revenue was also increased.

They said this during a media briefing held at a local hotel. The event was organised by the Society for the Protection of the Rights of the Child (Sparc).

Country head, Campaign for Tobacco-Free Kids Malik Imran said that the tobacco industry claimed that the increase in tax decreased the revenue of the government as consumers switched to smuggled products.

“However, whenever tax was increased, the revenue of the government was increased and when tax was decreased the revenue was also decreased. Taxation is a key revenue source for any government and taxing non-essential items such as tobacco must be done to the maximum in order to ensure fiscal imbalance, so the national exchequer does not suffer by it,” he said, adding that due to the government’s decision of increasing Federal Excise Duty (FED) on cigarettes in February 2023, an additional Rs11.3 billion in revenue was obtained in fiscal year 2022-23 which is an increase of 9.7pc from the previous year. Furthermore, an additional Rs4.4 billion was obtained in fiscal year 2022-23 which is an increase of 11.5pc from the previous year. This additional Rs15.7 billion revenue makes up 0.201pc of our gross domestic product (GDP), which is a significant boost for a struggling economy like Pakistan.

Mr Imran mentioned that self-explanatory figures revealed that increased taxation was beneficial for the economy but the tobacco industry misled everyone. He added that the blown up figure of illicit trade was used to divert people from underreporting.

“These companies under-report their production and then sell their non-reported products in the illicit market, causing loss worth billions to the national exchequer,” he alleged.

Former technical head of the health ministry’s Tobacco Control Cell Dr Ziauddin Islam said that tobacco was the largest silent killer in Pakistan as above 170,000 people died due to tobacco use each year.

“This pandemic also causes an annual economic burden of Rs615 billion which is 1.6pc of Pakistan’s GDP,” he said and explained that increased prices brought a decrease to production and consumption which decreased the health cost burden.

“According to estimates, there has been a 31.7pc decline in declared production of cigarettes in fiscal year 2022-23 compared to the previous year. Learning from this example, which is also recommended by World Health Organisation, Pakistan should increase taxes on regular intervals so that inflation and per capita income is accounted for and Pakistanis remain protected from harms of tobacco products,” Dr Islam said.

Khalil Ahmed Dogar, programme manager (Sparc), said that the children of Pakistan were being targeted by the tobacco industry.

Published in Dawn, May 18th, 2023