Islamabad:Managing Director, Social Policy and Development Centre (SPDC) Asif Iqbal noted that tobacco companies manipulate declared production to influence tax policies.
He was speaking at a roundtable on "Tobacco industry's tactics of manipulation of budgetary taxes: policy, practice and evidence" organised here by Sustainable Development Policy Institute (SDPI).
Asif Iqbal highlighted that nine companies implemented the track and trace system, with three utilising automated systems and holding a 60% share in the total tobacco market. He cited the 2023-24 SPDC survey, which found that despite a 19.2% increase in tobacco production, FED saw a 2.4% decline whereas GST revenue dropped by 26.1%. The industry's strategy of reducing production to pressure the government into lowering taxes was also brought to light. Furthermore, he said, data gathered by SPDC shows that the tobacco industry holds a 39% share in illicit trade.
Dr Waseem Saleem, representative of World Health Organisation (WHO) on tobacco taxation, stressed that the primary goal of FED on tobacco is to reduce consumption, and not to merely generate revenue. He pointed out that despite incremental tax increases since 2015-16, the percentage of FED on cigarettes remained relatively low, between 6% to 6.2%.
He also criticised the industry's claim that high taxes fuel illicit trade, stating that illicit trade is primarily an enforcement issue rather than a regulatory one. He further explained how small-scale unregistered tobacco manufacturers are evading taxes and how the industry's strategy of front-loading production creates artificial revenue declines to manipulate government policies.
Dr Fauzia Hanif, Deputy Director, Ministry of National Health Services Regulations and Coordination, reiterated that her Ministry is committed to protecting citizens from the dangers of tobacco. She acknowledged the economic burden of non-communicable diseases (NCDs), particularly heart disease, largely attributed to tobacco consumption. She stressed the importance of enforcing National Tobacco Control Strategy 2022-2030, increasing taxes, strengthening the track and trace system and ensuring a multi-sectoral approach to counter industry misinformation.
Dr Shafqat Munir, Deputy Executive Director, SDPI, emphasised that tobacco cultivation remains a politically sensitive issue. He called for a balanced approach, focusing on controlling its spread rather than attempting outright eradication. He urged the government to devise a multi-stakeholder implementation mechanism to address the issue comprehensively.
He called for a collective voice for stronger regulatory enforcement, increased taxation and a well-coordinated effort among government agencies, civil society and health organisations to combat the deceptive tactics employed by the tobacco industry.
Khalil Ahmed, Programme Manager, Society for the Protection of the Rights of the Child (SPARC), exposed the industry's tactics to pressure the government with threats of relocating businesses due to high tax burdens. He said that industry sponsors paid research studies to influence policymakers and uses media to publish misleading narratives including paid press releases and advertisements to counter anti-tobacco efforts.
Syed Ali Wasif Naqvi, Head of Center for Health Policy and Innovation, said Pakistan's cigarette industry had presented a puzzling scenario at the start of the fiscal year 2025 as soaring production was coinciding with declining tax revenues. However, despite a 30 per cent increase in production between July and November 2024, he said, FED and sales tax collections dropped by 7.8 per cent and 27.4 per cent respectively.
Dr Waseem Iftikhar Janjua, Advisor, SDPI, emphasised that tobacco companies are deeply involved in tax evasion, highlighting as to how industry-reported statistics on illicit cigarette trade tend to be exaggerated compared to independent academic findings, which present a much lower figure. The industry, he said, misleads policymakers by inflating numbers to resist taxation.
He further pointed out that contrary to industry claims, increasing tobacco product prices resulted in a decline in illicit trade. Additionally, the introduction of so-called "kiddie packs" was another tactic to lure young consumers while violating stricter regulations.