ISLAMABAD: The Technical Working Group on Tobacco Taxation (TWGTT) on Thursday held a meeting to devise a strategy for the increase of taxes on tobacco products in the budget for the fiscal year 2016-17 and discourage people from taking up smoking.
The meeting, chaired by the Tobacco Cell director Mohammad Waqas Tarar, was attended by representatives from the World Health Organisation (WHO), Federal Board of Revenue (FBR) and officials from the Ministry of National Health Services (NHS).
TWGTT, a government body, was established in 2014 and was mandated to review the existing tobacco tax structure in the country, and compare it to tobacco tax systems in other countries. It must also develop a roadmap to decrease tobacco consumption.
A source privy to the meeting said that the meeting discussed increases taxes on tobacco and taking steps of symbolic value to discourage smoking.
“It was also suggested that the tobacco tax exemptions given to the navy, the offices of the president, the president of Azad Kashmir and governors of provinces and members of their families and guests should be withdrawn,” he said.
He added that it was also recommended that 1pc of tobacco tax revenues be allocated for health purposes, including the promotion of health, tobacco control and health insurance.
“Currently on cigarette packets – which have a retail price of less than Rs72 – there is a tax of Rs28.4 per packet. It was suggested that the tax should be increased to Rs40, due to which not only would the lives of 0.55 million future smokers be saved, but the additional revenue of Rs39 billion will also be collected,” he said.
It was also suggested that tax of tobacco products such as unmanufactured tobacco, cigars, cheroots and cigarillos be increased.
Although tobacco consumption is injurious to health, most important offices, including the president and the Pakistan Navy receive tax exemptions on the purchase of tobacco products.
An official of the NHS ministry said that Pakistan is a signatory of the Framework Convention of Tobacco Control, Article 6 of which states that Pakistan must implement tax and price policies on tobacco products to reduce tobacco consumption.
“Tobacco taxes that translate into price increases are considered the single most effective option for reducing tobacco use and increasing revenues. Higher tobacco taxes save money by reducing tobacco-related health care costs, including medication expenses. According to a research higher taxes are effective in reducing tobacco use among lower-income groups and in preventing [young people] from taking up smoking,” he said.
“The tobacco industry generates revenue of around Rs 130 billion every year. If 1pc of tobacco revenue is spent on the health sector it will address many issues of the health sector. Although recommendations are in the best interest of the country and people, unfortunately the tobacco lobby is very strong and influential due to which we are not sure that recommendations will be implemented,” he added.
Tobacco Control Cell project manager Mohammad Javed told Dawn that while the withdrawal of the tax exemption on cigarettes presented in the president, prime minister and governors’ offices will have no significance in terms of revenue, it has symbolic value.
Published in Dawn, March 11th, 2016
