The Sustainable Development Policy Institute (SDPI) has uncovered shortfalls in tax collection from the cigarette industry over the past seven years. The shortfall has been consistent since the Federal Board of Revenue (FBR) introduced a new tax tier in 2017.
The study suggests that multinational cigarette companies influenced the decision to implement the third tax tier, which has resulted in a substantial revenue loss of approximately Rs567 billion.
The Tobacco experts believe that the introduction of the tier was due to pressure from two major cigarette firms during the tenure of the PML-N government and suggest an inquiry into the findings of the SDPI report and action against the companies involved.
Call for Reforms and Public Health Strategy
The report focuses on financial losses and highlights the significant influence wielded by the cigarette industry. Experts and researchers are advocating for urgent reforms to counteract the influence of these powerful industry players. A key finding of the SDPI study is the absence of a strategic approach in Pakistan to use cigarette taxation and pricing as tools for public health.
The study contrasts Pakistan’s approach with the successful implementation of high cigarette taxes in high- and middle-income countries, which have effectively reduced consumption and increased government revenue. The introduction of the three-tier excise duty structure in 2017, primarily aimed at revenue collection, neglected the negative impact on public health. This strategy failed to meet revenue targets and was misleading, resulting in Pakistan having some of the lowest cigarette prices worldwide, increased consumption, and added strain on the healthcare system.
The World Health Organization (WHO) emphasizes the need to protect tobacco tax policies from the vested interests of cigarette companies to develop and enforce public health initiatives effectively. As highlighted in the SDPI study, this principle appears to have been overlooked in Pakistan.
