Daily Times

As tax manipulation on cigarette business goes unchecked in connivance with cartelisation of cigarette-manufacturing companies and government authorities, smoking culture is on the rise, unleashing a spate of diseases that account for millions of lives each year.

It seems to be a planned scheme to manoeuvre taxation and implementation to keep tobacco market unhurt. Taxes strategised to discourage smoking spree gripping the society each passing day have been catalysed to breathe new life into cigarette companies.

In order to ensure tobacco-free society, excise tax must be at least 70 percent of the retail price of the cigarettes in line with directives of World Health Organization (WHO) around the globe. However, it is merely 45 percent in Pakistan. During the last budget, a proposal to ramp up the Rs 44 tax on a pack of 20 cigarettes dropped mysteriously, and another slab of Federal Excise Duty (FED) came to limelight which introduced Rs 16 reduction on a pack of 20 cigarettes with a retail price below Rs 58.5.

Statistics show that due to tobacco consumption, 109,000 Pakistanis perish annually and 6,000 patients are hospitalised daily. Tobacco-related deaths cause loss of income, increase healthcare costs and stagnates national development.

By tricking taxes on the tobacco industry, Pakistan is openly defying United Nations Sustainable Development Goals which especially call for the implementation of the World Health Organisation Framework Convention on Tobacco Control (WHOFCTC) in all countries. The WHO FCTC, in its Articles 6 to 14, spells out loud and clear that price and tax measures should be applied to cut the demand for tobacco.

As Budget 2018-19 draws closer, it is expected that the new tax regime will introduce public-centric policies to make Pakistan a tobacco-free country

Mafia that manipulated taxation system on smoking business has got done all things in its favour. Tobacco consumers, in fact, have to pay a significant portion of taxes directly applied to the sale of packet and companies bear the lesser brunt. What is paid by companies is just two percent of the turnover.

According to a research paper on The Economics of Tobacco and Tobacco Taxation in Pakistan, prepared by Shahid Javed Burki, Aisha G. Pasha, Hafiz A Pasha, Rijo John, Prabhat Jha, Aftab Anwar Baloch, Ghulam Nabi Kamboh, Rajeev Cherukupalli and Frank J. Chaloupka, high rates of tobacco use impose a large health and economic burden in Pakistan. One of the most effective ways to reduce tobacco use in Pakistan is to raise the price of tobacco products through excise tax increases.

The paper says that cigarette excise taxes in Pakistan account for just over half of the price paid by users. This is below the level in countries that have taken a comprehensive approach to reducing tobacco use, where excise taxes account for 70 percent or more of the retail price.

It recommended a high uniform cigarette excise tax that significantly hikes cigarette prices and reduces tobacco use. ‘Implement annual adjustments to tobacco tax rates so that they retain their real value over time and are not eroded by inflation and so that they result in increases in tobacco product prices that are at least as large as increases in per capita incomes. Increase taxes on other tobacco products to be equivalent to cigarette taxes and to reduce the use of these products. Strengthen tobacco tax administration, increase enforcement, and tax duty-free sales of tobacco products to reduce tax evasion and avoidance. Earmark tobacco tax revenues for health purposes, including health promotion and tobacco control,’ outlined the research report.

To my perspective, tax regime in Pakistan should be re-examined and reassessed to check illicit profitability of tobacco producers and manufacturing entities. A balanced taxation system should be brought into practice to curtail production and sales of tobacco and cigarettes instead of a surge in the incidence of taxation on smokers.

It is also demand of time that government, health ministry and all those who are at the helm of affairs ensure compliance of Article 11 of FCTC, which stresses on health warning to be printed on the front side and the back side of the cigarette packets and printed cigarette outers.

As budget 2018-19 draws closer, it is expected that new tax regime be brought into being by introducing public-centric policies to make Pakistan tobacco-free country.

The writer is a senior journalist writing on the economy, environment, international relations, human rights, governance and politics. He is a fellow of the International Centre for Journalists (ICFJ) and is a recipient of China-friendly Netizen 2017 award. He can be reached at yaseerkhan@hotmail.com; Twitter @yasirkhann

Published in Daily Times, April 24^th 2018.