IMF’s proposal of a single tier tobacco taxation system laudable: Speakers

HealthIMF’s proposal of a single tier tobacco taxation system laudable: Speakers

By Hamid Khan Wazir

ISLAMABAD, Pakistan: Speakers at a function have thrown their weight behind the International Monetary Fund’s (IMF) recommendations regarding restructuring tobacco taxation by bringing uniformity in tax structure on tobacco products, as it would not only help boost revenue but would also help relieve the healthcare cost burdens caused by tobacco-related illnesses.

   

Speaking at the event “Fueling Economic Growth through Increased Tobacco Taxation” organized by the Society for the Protection of the Rights of the Child (SPARC), the health activists urged the government to transition to a Single Tier Tobacco Taxation System, thereby eliminating the second tier.

They were of view that this strategic move is deemed essential not only for boosting revenue but also for relieving the healthcare cost burdens imposed by tobacco-related illnesses.

Malik Imran Ahmed, Country head Campaign for Tobacco Free Kids (CTFK), highlighted the alignment between the IMF’s recommendations and the ongoing discussions with Pakistan. These discussions aim to tackle the nation’s fiscal and external sustainability weaknesses while fostering economic recovery and inclusive growth. A key component involves strengthening public finances through gradual fiscal consolidation, broadening the tax base in undertaxed sectors, and improving tax administration to enhance debt sustainability. Imran emphasized the urgent need to tie these objectives with tobacco taxation, stressing the imperative of reforming Pakistan’s cigarette taxation system.

Malik Imran further emphasized that revitalizing Pakistan’s cigarette taxation system transcends mere fiscal considerations; it is a matter of urgent public health concern. He lamented that despite the substantial taxes imposed on cigarettes, the revenue generated falls short of covering the healthcare costs incurred due to smoking-related illnesses. In the fiscal year 2022-23, taxes covered a meager 16% of these expenses, indicating a significant decline from 19.5% in 2019.

Dr. Khalil Ahmad Dogar, Program Manager at SPARC, underscored the alarming prevalence of tobacco use in Pakistan. With approximately 31.9 million adults aged 15 years and above reported as current tobacco users, constituting nearly 19.7% of the adult population, the dire consequences of tobacco consumption extend far beyond individual health. Dr. Khalil reiterated that over 160,000 deaths are attributed to smoking-related illnesses annually, amounting to a staggering 1.6% of the nation’s GDP each year.

Khalil stressed the urgent need for immediate action to bridge the gap between tobacco tax revenue and healthcare costs. He advocated for the adoption of a Single Tier Tobacco Taxation System, as recommended by the IMF, as a means to not only bolster revenue but also to alleviate the health and economic burdens associated with tobacco consumption.

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