Capital Calling welcomes IMF recommendations for uniformed tax on tobacco products

Expert call for taxing tobacco to help channelize public health initiatives

ISLAMABAD, MAR 20 /DNA/ – Capital Calling, an Islamabad-based think tank, has welcomed the reports that International Monetary Fund (IMF) has asked Pakistan to impose uniform excise rates on both local and foreign cigarette manufacturers.

It also appreciated former health minister Dr Nadeem Jan calling for a 50 percent increase in taxes on cigarettes to make them harder to access for the masses.

The think tank has endorsed the minister’s statement rubbishing the propaganda that rise in taxes will lead to smuggling of cigarettes, resulting in a loss to the national exchequer.

According to estimates, cigarette prices are the cheapest in Pakistan compared to other regional countries, it said.

The reports on IMF recommendations mention that it has suggested applying a consistent excise rate in one slab to all domestically produced cigarettes, regardless of the manufacturer’s origin.

It means local and multinational manufacturers will face no discrimination in taxes. Currently cigarettes are taxed in two tiers, which is resulting low collection of taxation from the cigarette industry.

Furthermore, the IMF has also proposed subjecting e-cigarettes to taxation similar to traditional tobacco products, citing comparable health impacts.

This recommendation is strictly in line with the guidelines set by the World Health Organization (WHO), said Dr Hassan Shehzad, from International Islamic University. He said due to the two-tier system, multinational companies manage to place their cigarettes in lower tier which results into reduction in cigarette prices.

The objective of these recommendations is to ensure equitable taxation across cigarette products, regardless of their source.

The think tank stated that it is estimated that the government has faced Rs567 billion loss due to influence of the international tobacco companies.

It said there is dearth of research to measure the damage that smoking has done to the society. The survey conducted to assess this damage are highly tilted towards economics, hence offering no solutions as to how to bring down smoking in the society.

Similarly, there is no concrete media strategy to counter smoking and its psychological impacts.

It said majority of smokers are in their thirties and there is a need to think about this age group formulating policies.

The institutions formed to counter smoking suffer from lack of coordination and vision; hence, fast losing their relevance. Capital Calling has demanded a reset of the mechanism to counter tobacco and fully implementation of IMF recommendations for uniformed tax on tobacco products, thinking of it as a right step to take.