Health Ministry aspires to generate Rs24 bn additional tax revenue from tobacco

Islamabad: The Ministry of National Health Services has tabled an ambitious tobacco taxation reform proposal for consideration in the upcoming budget. The proposal, which seeks to generate Rs24 billion in additional tax revenue, could spell a win-win situation for Pakistan if implemented as it has the potential to encourage 1.18 million current smokers to quit in addition to saving the lives of at least 439,389 current smokers. In a letter addressed to the PM’s Advisor on Finance Dr. Abdul Hafeez Sheikh, the PM’s Special Assistant on Health Dr. Zafar Mirza has made a series of recommendations for incorporation in the Finance Bill 2020-21.

The recommendations include removal of all exemptions of tobacco taxes provided at Serial No. 4 of Schedule 3 of the Federal Excise Act (i.e., Pakistan Navy, President of Pakistan, President of Azad Jammu and Kashmir, Governors of all Provinces, members of their families and guests). The proposal also calls for earmarking 2% of tobacco tax revenues for the Sehat Sahulat Programme, and other programmes focusing on treatment of Non-Communicable Diseases (NCDs) and tobacco control. Immediate implementation of an electronic tacking and tracing system to monitor the production of cigarettes in a bid to halt smuggling of international brands and production of non-duty and counterfeit cigarettes in the country has also been recommended. The proposal has been made after deliberations on the subject with the World Health Organization, the University of Illinois-Chicago, and the Tobacco Control Cell of the Ministry of National Health Services.

The letter refers to the World Health Organization’s (WHO) recent disclosure about COVID-19 worsening pre-existing cardiovascular conditions. “In addition, a weaker cardiovascular system among COVID-19 patients with a history of tobacco use could make such patients susceptible to severe symptoms, thereby increasing the chances of death. In order to enhance public health, negative and harmful practices including smoking and tobacco use need to be discouraged,” the letter states, building a case for implementation of the proposal, which is based on findings derived from national and international studies. In view of the rising burden of tobacco use in the country and Pakistan’s international obligations under the Sustainable Development Goals (SDGs) and the Framework Convention on Tobacco Control (FCTC), the Ministry has pointed out that an increase in the prices of cigarettes is one of the most effective tobacco control interventions as it is proven to reduce smoking, especially among youth. Moreover, increasing the prices of cigarettes will also help generate increased revenue.

Article 6 of the Framework Convention on Tobacco Control (FCTC), of which Pakistan is a signatory, requires the country to implement taxation and pricing policies on tobacco products in a manner that would reduce tobacco consumption. Similarly target 3.4 of the SDGs requires Pakistan to reduce, by one-third, premature mortality from NCDs by promoting mental health and well-being by 2030.

Tobacco use is the leading preventable risk factor for NCDs. Heart attacks and stroke, cancers, chronic respiratory diseases, and diabetes killed 666,000 Pakistanis in 2014. Simple cost-effective measures can significantly reduce the burden of NCDs; these include lifestyle modification measures such as regular physical activity, consumption of a balanced diet with reduced intake of sugar and salt in everyday cooking, and zero tobacco use. Tobacco use is the single largest preventable cause of death worldwide, with huge economic implications including direct costs related to healthcare expenditures and indirect costs related to lost productivity due to early mortality and morbidity.