IMF’s proposal of uniformed tax on tobacco products welcomed by Capital CallingBreaking

March 20, 2024

The reports that International Monetary Fund (IMF) has asked Pakistan to impose uniform excise rates on both local and foreign cigarette manufacturers has been highly appreciated by Islamabad-based think tank, Capital Calling. Hailing former health minister Dr Nadeem Jan, it also called for a 50 percent increase in taxes on cigarettes to make them harder to access for the masses. The think tank said that statement of the mister has rubbished the propaganda that rise in taxes will lead to smuggling of cigarettes, resulting in a loss to the national exchequer. Quoting the estimates, it stated that cigarette prices were the cheapest in Pakistan compared to other regional countries. The IMF recommendations relating reports mentioned 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 was 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 was to ensure equitable taxation across cigarette products, regardless of their source. The think tank stated that it was estimated that the government has faced Rs567 billion loss due to influence of the international tobacco companies. It said there was dearth of research to measure the damage that smoking has done to the society. The survey conducted to assess this damage was highly tilted towards economics, hence offering no solutions as to how to bring down smoking in the society. Similarly, there was no concrete media strategy to counter smoking and its psychological impacts. It said majority of smokers were 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.

Credit: Independent News Pakistan