Islamabad: Tobacco use costs 615 billion rupees a year on the state treasury in terms of economic and health costs, as the direct costs of smoking account for 8.3 percent of total health expenditure in the country.
Anti-smoking experts said so in a virtual launch of the "Tobacco Tax Reform Model in Light of the Burden of Healthcare Costs" by the Society for the Protection of the Rights of the Child (SPARC) here on Wednesday.
They said that tobacco annually kills 1.6 percent of GDP and takes 615 billion rupees out of the economy as health care costs.
Addressing attendees, Malik Imran Ahmad, Country Head Campaign for Tobacco Free Kids (CTFK) stated that the direct cost of smoking is 8.3 percent of total health expenditure, equivalent to 1.6 percent of Pakistan's GDP. In comparison, the total tax contribution of the tobacco industry (120 billion in 2019) is only around 20 percent of the total cost of smoking.
He added that the current tax structure allows the tobacco industry to sell cheaper cigarettes. Given the economic and health costs of tobacco use, it is highly recommended that the current tax rate be increased by four to five times. First, however, it is imperative that the Federal Board of Revenue (FBR) increase excise taxes to meet the WHO recommended threshold of 70 percent of the retail price of a pack of cigarettes.
He added that the FBR needs to limit the tobacco industry's leeway for tax maneuvers by gradually moving to a one-tier tax system. These reforms will effectively reduce the affordability of tobacco and save millions of youth from falling into costly lifelong loyalty.
Dr. Nausheen Hamid, Parliamentary Secretary for the Ministry of National Health Services, Regulation and Coordination, said 30 million adults (15 years and older), or about 19.1 percent of adults, currently use tobacco in Pakistan. This consumption is the leading cause of death from cancer, chronic respiratory diseases and cardiovascular diseases. She shared alarming statistics that an estimated 170,000 people were killed in tobacco use in 2017.
SPARC program manager Khalil Ahmed shared the low prices of tobacco products that make them affordable for teenagers as cigarette prices in Pakistan are among the lowest in the world. The average consumption tax share of 45.4 percent of the retail price is well below the WHO recommendation that the consumption tax should be at least 70 percent of the retail price. Currently, the effective rate of excise duty on cigarettes is still the same as it was 5 years ago as the federal excise tax has not changed and nominal income and inflation have increased. Because of this simple affordability, around 1,200 children between the ages of 6 and 15 start smoking every day in Pakistan.
Sana Ullah Ghuman, general secretary of the Pakistan National Heart Association (PANAH), said it is time for policy makers to recognize that the economic and health costs of tobacco use are higher than Pakistan's annual public health spending. Adopting the tobacco tax reform model will result in 219,000 fewer smokers. 3.8 percent reduction in adult smoking prevalence; Reduction in smoking intensity in adults by 6.4 percent; and additional total tax revenue of Rs 19 billion.
