Daily Times

Pakistan has been urged by the International Monetary Fund (IMF) to overhaul its tax machinery through taxing -essential items including cigarettes to boost revenue and improve public health.

Health advocates have highly appreciated a set of recommendation and taxing non-essential items including cigarettes given by the global lender.

Head of Zaman Research Center at Quaid-i-Azam University (QAU), Prof Muhammad Zaman said, “This is a crucial time for the government to fix economic problems and implement the IMF recommendation.” The IMF report has referred to a phenomenal study on this subject conducted by Capital Calling, an Islamabad-based think tank, which says the cigarette consumption has decreased due to increase in prices, he added. Prof Zaman said there was a need to bring into account the cost of morbidity and mortality that smoking inflicts on the society.

“Smoking is injurious to health regardless of the cigarette brand,” he said.

The head of Zaman Research Center at QAU pointed to critical flaws within Pakistan’s tax system particularly the cigarette industry, which have facilitated a loss of Rs567 billion during last seven years, as revealed by the Sustainable Development Policy Institute (SDPI). The study further exposed the influence of multinational cigarette companies on policymakers, particularly evident in the introduction of a three-tier excise duty structure in 2017, which prioritized revenue collection over public health considerations. However, subsequent analysis proved this approach to be ineffective and misleading in revenue generation.

The SDIP research highlighting global best practices and how high and middle-income countries have successfully used high cigarette taxes to reduce consumption and boost government revenues. Pakistan, however, lacks a coherent strategy in utilizing cigarette taxation and pricing as a public health tool.