SPDC proposes to extend tobacco tax for the 2021-22 finances

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The income tax rate for traders has been lowered to 0.25 percent

KARACHI: The Social Policy and Development Center (SPDC) has proposed in a note to raise the tax rate on cigarettes in Pakistan, which was only 45.4 percent of the retail price and well below the WHO recommended minimum tax rate of 70 percent.

"An increase in the tax rate would improve health outcomes by reducing cigarette consumption and generating additional revenue for the government," says the policy statement entitled "Modeling the Revenue and Health Impacts of Tobacco Tax Policy in Pakistan: Options for the 2021 Federal Budget" . 22 ”.

The in-depth analysis shows that an increase in the excise tax rate by just 30 percent would result in 219,000 fewer smokers, a 3.8 percent decrease in adult smoking prevalence and the prevention of 424,000 smoking-related deaths, including 348,000 future young smokers. On the revenue side, additional sales of Rs 19 billion are generated – an increase of 14.4 percent compared to the base year.

With a prevalence rate of 19.1 percent, around 30 million adults (aged 15 and over) currently use tobacco in the country. Tobacco use is the leading cause of death from non-communicable diseases (NCDs), killing over 160,000 people each year.

Tobacco taxation is used in Pakistan as a political tool to curb tobacco use and serves a dual purpose of promoting public health and generating income. However, the current level of the effective rate of excise duty on cigarettes is still the same as it was five years ago in the 2016-17 period.

"As a result, cigarettes have become more affordable in Pakistan as cigarette prices in Pakistan are the lowest among regional countries including India, Bangladesh, Sri Lanka, Nepal and Iran," the policy statement said.

The tobacco tax reform proposed by SPDC would greatly help the Pakistani government to meet its commitment to tobacco reduction and death from NCDs in line with its commitment to achieve SDG-16 and align its tobacco tax policies with global best practices .