Islamabad:In a groundbreaking development, a recent study has revealed that the Pakistani government expects to collect approximately 200 billion rupees in taxes from the tobacco industry this year following a significant tax hike.
The study further highlights that the tax collection from the tobacco industry in the previous fiscal year stood at 148 billion rupees. According to the research study titled "Higher tobacco tax helps bring down sale of cigarettes in Pakistan," the increase in cigarette prices, driven by a higher Federal Excise Duty (FED) ranging from 146 per cent to 154 per cent implemented in February this year, has compelled one in every ninety-four smokers to quit smoking.
This has resulted in smokers redirecting their savings towards fulfilling other essential needs such as food, education, healthcare, and utility payments. With over 31 million adult tobacco users in Pakistan, accounting for approximately 19.7 per cent of the country's total adult population, the findings shed light on the significance of this positive trend.
Ground surveys conducted in Islamabad, Rawalpindi, Lahore, and Peshawar revealed that smokers are now actively saving money by quitting smoking and allocating those funds to crucial areas of their lives. The study, released by a study group against tobacco use, underscores the economic and health benefits associated with reduced smoking rates. It highlights that the tobacco industry's impact on the national exchequer through diseases such as cancer, chronic respiratory diseases, and cardiovascular ailments is estimated to be around Rs620 billion, with an alarming 337,500 deaths attributed to tobacco-related illnesses annually.
Addressing concerns raised by multinational companies operating in the tobacco industry, the study disputes claims of a higher prevalence of illicit cigarettes in the market. While multinationals allege a market share of 40 to 42 per cent for illicit cigarettes, the ground surveys suggest that their actual presence does not exceed 18 per cent.
Pakistan Customs officials believe that within this 18 per cent, the majority comprises smuggled cigarettes, a challenge that could be effectively addressed through improved border management. The study emphasises that multinational companies cannot exploit the prevalence of illicit and illegal cigarettes as a means to evade taxes and maximise profits by selling inexpensive cigarettes to the Pakistani population. It highlights the urgency for federal authorities to address the issue of smuggling, as it poses a significant hurdle in bringing such cigarettes into the tax regime.
The study also raises concerns about companies attempting to compensate for profit losses incurred by increased taxes on cigarettes through the sale of their smuggled brands at lower prices in the local Pakistani market. As Pakistan witnesses a remarkable decline in smoking rates following the tax hike, the government's efforts to curb smoking-related health issues and bolster tax revenues are receiving widespread recognition.
This monumental shift in smoking patterns brings hope for improved public health outcomes, enhanced financial resources for the country, and a renewed focus on the overall well-being of the Pakistani population.
