IMF urges Pakistan to boost revenue via taxing non-essential items

ISLAMABAD  -  Pakistan has been urged by the Interna­tional Monetary Fund (IMF) to overhaul its tax machinery through taxing non-essential items including cigarettes to boost revenue and improve public health.

Health advocates have highly appreci­ated a set of recommendation and taxing non-essential items including cigarettes given by the global lender. Head of Zaman Research Center at Quaid-i-Azam Univer­sity (QAU), Prof Muhammad Zaman said, “This is a crucial time for the government to fix economic problems and implement the IMF recommendation.”

The IMF report has referred to a phe­nomenal study on this subject conducted by Capital Calling, an Islamabad-based think tank, which says the cigarette con­sumption has decreased due to increase in prices, he added. Prof Zaman said there was a need to bring into account the cost of morbidity and mortality that smoking inflicts on the society. “Smoking is injurious to health regardless of the cigarette brand,” he said. 

The head of Zaman Research Center at QAU pointed to critical flaws within Pakistan’s tax system particularly the cigarette industry, which have facilitated a loss of Rs567 billion during last seven years, as revealed by the Sustainable De­velopment Policy Institute (SDPI). The study further exposed the influence of multinational cigarette companies on policymakers, particularly evident in the introduction of a three-tier excise duty structure in 2017, which prioritised rev­enue collection over public health con­siderations. However, subsequent analy­sis proved this approach to be ineffective and misleading in revenue generation.

The SDIP research highlighting global best practices and how high and middle-income countries have successfully used high cigarette taxes to reduce consump­tion and boost government revenues. Pakistan, however, lacks a coherent strat­egy in utilising cigarette taxation and pricing as a public health tool.

Dr Hassan Shehzad from the Inter­national Islamic University Islamabad (IIUI) echoed sentiments from the World Health Organization (WHO), stressing the need to shield tobacco tax policies from vested interests of cigarette compa­nies to ensure effective development, im­plementation, and enforcement of public health initiatives.

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