ISLAMABAD: Pakistan has lost Rs567 billion potential revenue in the last seven years due to loopholes in policies of tax collection from the cigarette industry.

The World Health Organisation (WHO) emphasises the need to safeguard tobacco tax policies from vested interests of cigarette companies for effective development, implementation and enforcement of public health initiatives. However, it did not happen in the country.

These are the findings of a study titled ‘FBR missed the targets since 2017 after introduction of third-tire’ conducted by Sustainable Development Policy Institute (SDPI).

It stated that the decision to introduce the third tier was taken by the then government under the influence of multinational cigarette companies. However, the country lost Rs567 billion potential revenue because of the decision taken in 2017.

Talking to media, country head Campaign for Tobacco Free Kids Malik Imran said the PML-N’s last government introduced third tier due to the pressure of two big cigarette companies operating in Pakistan.

He demanded the government to initiate inquiry on the basis of the report and take immediate action against those companies.

Meanwhile, researchers and analysts have demanded urgent attention and comprehensive reforms to navigate through these challenges and counter the influence of the powerful cigarette industry giants.

The SDPI study has also shed light on the dynamics of the cigarette industry and its strong influence.

The study highlighted how high and middle-income countries successfully imposed high taxes on cigarette products to decrease consumption and increase government revenues, but Pakistan lacked a clear strategy on using cigarette taxation and prices as a public health tool.

According to details, multinational cigarette companies pushed authorities to introduce a three-tier excise duty structure in 2017, while shifting the focus on revenue collection and ignoring adverse effects on public health.

However, it was later proved that the target of collecting more revenue through introduction of the third tier was also missed and was grossly misleading.

Published in Dawn, January 15th, 2024