Activists call for tobacco tax hike to recover healthcare costs

ISLAMABAD   -  Healthcare activists have called for a tobacco tax hike in 2024 to recover healthcare costs and save lives. They said this at an event by The Society for the Protection of the Rights of the Child (SPARC). Mu­hammad Sabir, Principal Economist at the Social Policy and Development Centre (SPDC), shared the recommendations at an event organized to launch a tobacco taxation simula­tion model published by the Social Policy and De­velopment Centre (SPDC). Sabir said that Pakistan presently operates with a two-tiered Federal Ex­cise Duty (FED) structure for cigarettes, categorized by price tiers. Following a substantial increase in 2022-23, the FED share in retail prices reached 48% and 68% for low and high tiers, respectively. How­ever, the leveling off of the FED share in 2023-24, due to the absence of rate ad­justments, could adversely affect revenue and public health efforts. Sabir added that a proposed 26.6% FED increase in 2024 could recoup 19.8% of the costs, narrowing the gap be­tween health burdens and tax revenues. A 26.6% FED hike could potentially lead to 517,000 fewer smok­ers, a 12.1% increase in tax revenue, and a 19.8% re­covery of health costs. Be­yond 2023-24, the govern­ment should integrate cost recovery into tobacco tax policies through automatic adjustments, implement a uniform FED rate across all cigarette brands, and pre­scribe tax increases for the next three years. Dr. Ziaud­din Islam, Former Techni­cal Head, Tobacco Control Cell, Ministry of National Health Services and Regu­lations and Coordination, stated that recent statis­tics reveal that in Pakistan, 31.9 million adults aged 15 years and above, ap­proximately 19.7% of the adult population, are cur­rent tobacco users. The use of tobacco leads to over 160,000 deaths annu­ally in Pakistan, amount­ing to 1.4% of the nation’s GDP each year. It is impera­tive to revitalize Pakistan’s cigarette taxation system. He added that the costs associated with smoking-related health issues have surpassed the revenue generated from cigarette taxes. In 2022-23, taxes covered only 16% of these costs, a significant decline from 19.5% in 2019.

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