ISLAMABAD: The Network for Consumer Protection has appealed to Prime Minister (PM) Nawaz Sharif to take strict notice of state institutions adopting and quoting the multinational tobacco industry’s statistics to weaken the government’s anti-tobacco regulations.
Nadeem Iqbal, chief executive of the network, pointed out on Friday that instead of generating their own statistics or adopting those of the government agencies, some state institutions have been adopting the multinational tobacco industry generated deceptive and forged statistics that health regulations result in loss of revenue to the government. These deceptive arguments are also reflected in debates in parliament. These multinational tobacco corporations have hired firms to develop these misguiding reports for their own benefit.
“The tobacco industry’s claim that stringent health regulations result in an increase in tobacco smuggling and counterfeit cigarettes has no evidence, but the fact that WHO-recommended higher taxes on tobacco raise FBR revenue and keep cigarettes away from children is a widely proven fact,” says Nadeem.
A report released recently by a state institution and published in different media outlets claimed that illicit cigarettes account for 40 per cent of the total demand in Pakistan. The report quotes tobacco industry’s statistics, which exaggerates the nature and impact of illicit trade when arguing against proven measures to reduce tobacco use; because communicating the truth about tobacco control and illegal trade does not serve its interests. These biased statistics are being cherry-picked from doctored reports to benefit the two big tobacco players present in the country, namely BAT and PMI.
Malik Imran Ahmed, a representative of Campaign for Tobacco-Free Kids US, said strong tobacco control policies like tobacco tax-increase reduces tobacco use even in the presence of illegal trade.
According to Euromonitor International, the proportion of total illicit cigarette sales has actually declined over the past five years. In 2011, 27.3% of total cigarette sales were illegal, while in 2015 this had decreased to 20.6%, about half as much as claimed in the report. The volume of illicit cigarettes sold has also decreased annually since 2011, from 23.6 billion sticks that year to 15.5 billion in 2015, he added.
On the other hand, legal cigarette sales have also decreased annually. Euromonitor International reports 59.8 billion sticks sold in 2015, down from 62.9 billion in 2011. This reduction in cigarette consumption is a success for tobacco control and public health policies, but not due to an increase in illicit trade which has been falling over the years.
The said report also claimed that federal excise duty paid on cigarette sales has declined in the first quarter of Pakistan’s fiscal year (June 1-Aug 31, 2016). This can be attributable to stockpiling a multinational tobacco industry strategy to undermine tax increases by over-supplying their products to the market before the increase goes into effect. In reality, higher tobacco taxes actually produce higher tax revenues for the government. The demand for tobacco products is inelastic which means that the proportionate reduction in demand for tobacco is smaller than the proportionate size of tax increase. Thus, even though demand is reduced when taxes and prices increase, the higher tax rate will result in overall increases in tax revenues.
Every nation and sub-national entity with an efficient tax system that has significantly increased its cigarette tax has enjoyed substantial increases in revenue, even while reducing tobacco use.
Raising the price of cigarettes is the principal measure for discouraging consumption and avoiding the initiation of tobacco use among children and youth. Reduced tobacco consumption will result in a healthier and more productive workforce, which will help boost the economy. Increased government revenues from higher taxes and reduced health care costs for tobacco-related diseases can finance government programs that benefit the economy. Government agencies should not rely on forged and manipulated reports to develop their conclusions and policies, but should either conduct their own studies or rely on studies of independent and world renowned organizations like the WHO and their affiliates, which depict the true nature of the problem and would reveal those actually at fault.