SPDC proposes high taxes to control smoking

ISLAMABAD   -   Express­ing grave concern over the hu­man health cost due to the in­creased tobacco consumption in the country, the Social Poli­cy Development Centre (SPDC) has proposed an increase of 37 percent in Federal Excise Duty (FED) on tobacco products ar­guing it would not only rein­force the gains already achieved but also advance further in en­hancing public health outcomes and revenue collection.

“Pakistan can save as many as 265,000 lives, generate an addi­tional revenue of Rs37.7 billion and push 757,000 people to quit smoking through increas­ing the FED by 37 percent,” said the SPDC policy paper “Recov­ering Healthcare Costs and Sav­ing Lives” that aligns recom­mendations of WHO and CTFK.

The SPDC proposal comes when the government pre­pares to outline its budgetary agenda, in a bid to prioritise public health and econom­ic prosperity through targeted tobacco tax reforms.

Pakistan was among the coun­tries where smoking has high prevalence. The data shows that a staggering 31.6 million adults—equivalent to nearly 20% of the adult population—use tobacco products in Pakistan. 

Pakistan has two-tiered sys­tem of FED on cigarettes. The country made significant strides and increased the FED on cigarettes in 2022-23 with substantial increase in FED. The current FED share in retail pric­es is 48 percent and 68 percent respectively for low and high tiers. The SPDC has warned of negative effect on both the rev­enue and public health efforts if the rates (FED) were not in­creased and trend was not maintained. Therefore, it advo­cated to further adjust the FED in line with international stand­ards, to take the tax share of re­tail prices towards 70 percent. 

The proposal was backed by the gains of previous tax adjust­ments, which have demonstrat­ed tangible reductions in smok­ing rates and significant financial gains for the government.

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