Aurat Foundation advocates a 26 percent FED increase on cigarettes instead of burdening the public by imposing GST on petroleum.
Speaking at an iftar dinner for the newly elected MNAs, Mr. Naeem Ahmed Mirza, Executive Director, Aurat Foundation, called the federal government for a Tobacco Tax Hike in 2024 to increase the budget deficit and save lives. Pakistan presently operates with a two-tiered Federal Excise Duty (FED) structure for cigarettes, categorized by price tiers. He further added that by reducing tobacco consumption through higher taxes, the economic burden associated with tobacco-related diseases is lowered, potentially freeing up resources that can be allocated towards poverty reduction efforts such as targeted social programs and economic development initiatives.
He said that the Aurat Foundation recently joined the campaign for tobacco-free kids to strengthen monitoring and accountability mechanisms, improve public health, and enhance the overall well-being of the Pakistani young population.
Mr. Anees Ahmed, Country Advisor of Campaign for Tobacco-Free Kids, while briefing the MNAs informed that following a substantial increase in 2022-23, the FED share in retail prices reached 48% and 68% for low and high tiers, respectively. However, the leveling off of the FED share in 2023-24, due to the absence of rate adjustments, could adversely affect revenue and public health efforts. The Aurat Foundation proposes that 26.6% FED increase in 2024 could recoup 19.8% of the costs, narrowing the gap between health burdens and tax revenues. A 26.6% FED hike could potentially lead to 517,000 fewer smokers, a 12.1% increase in tax revenue, and a 19.8% recovery of health costs.
Beyond 2023-24, the government should integrate cost recovery into tobacco tax policies through automatic adjustments, implement a uniform FED rate across all cigarette brands, and prescribe tax increases for the next three years.
Ms Mumtaz Mughal, Director Programs, an anti-tobacco campaigner at Aurat Foundation stated that the latest statistics reveal that in Pakistan, 31.9 million adults aged 15 years and above, approximately 19.7% of the adult population, are current tobacco users. The use of tobacco leads to over 337,500 deaths annually in Pakistan, amounting to 1.4% of the nation’s GDP each year, she concluded quoting a World Bank Report.