Islamabad – Cigarette consumption is increasing in developing countries and Pakistan is no exception and has witnessed an uptick in recent years and instead of generating additional revenue from the cigarette industry, the country has suffered billions in losses both in terms of revenue and increased healthcare costs. .
Pakistan is one of the largest tobacco consuming countries and ranks 7th globally and 1st in the WHO Eastern Mediterranean Region (EMR) in terms of the number of users of tobacco products.
The country is estimated to produce more than 60 billion cigarettes every year, but when it comes to revenue, Federal Board of Revenue (FBR) data shows that all tax collection targets have not been met in the last seven years.
The total loss, estimated by a number of research studies, including one by the Sustainable Development Policy Institute (SDPI), is estimated at Rs 567 billion over the past seven years.
The World Health Organization (WHO) emphasizes the need to protect tobacco taxation policy from the vested interests of cigarette companies for the effective development, implementation and enforcement of public health initiatives. However, this did not happen in Pakistan.
The study also highlighted how high- and middle-income countries have successfully implemented high taxes on cigarette products to reduce consumption and increase government revenue, but the fact remains that Pakistan still lacks a clear strategy for using cigarette taxation and pricing as a public health tool.
Pakistan is a signatory to the Framework Convention on Tobacco Control (FCTC), a multilateral treaty initiated by the World Health Organization (WHO) in 2004 to reduce smoking.
Two decades after the FCTC, the cigarette industry is influencing decision-making and the country is on the hook – losing revenue and putting an additional burden on the country’s fragile health system.
The World Bank also revealed in a report titled “Pakistan: Overview of Tobacco Use, Tobacco Control Legislation and Taxation” that the decline in government revenue in the 2016-2017 fiscal year was carefully planned by the powerful cigarette industry.
According to details, the cigarette industry persuaded the government to introduce a third tier (for taxation) to curb the illicit trade. The industry reported exaggerated numbers of illicit trade and subsequently with the introduction of the third tier in the tobacco taxation regime, revenue fell from Rs 114.27 billion in 2015-16 to Rs 83.76 billion in 2016-17.
In terms of health burden, the Pakistan Institute of Development Economics (PIDE) provides an overview of the total costs of smoking-related diseases and deaths in Pakistan for 2019.
The analysis points to an additional financial burden of Rs 615.07 billion ($3.85 billion), with indirect costs such as morbidity and mortality accounting for a significant 70% of the total cost.
This highlights the urgent need to reassess the influence of industry on national policies and highlights the importance of balancing public health and economic stability.
