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Activists call for tobacco tax increases to defray health care costs

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Healthcare activists are urging for a tobacco tax increase in 2024 to offset healthcare costs and mitigate the adverse effects of smoking. Muhammad Sabir, Chief Economist at the Social Policy and Development Center (SPDC), emphasized the importance of this measure during an event organized by the Society for the Protection of Children’s Rights (SPARC). Sabir highlighted the current two-tier Federal Excise Duty (FED) structure on cigarettes in Pakistan, noting that the FED share in retail prices reached 48% and 68% for low and high tiers, respectively, after a significant increase in 2022-23. However, he expressed concern that the FED share remained stagnant in 2023-24 due to the lack of rate adjustments, which could negatively impact revenue and public health efforts.

Sabir proposed a 26.6% FED increase in 2024, which he estimates could defray 19.8% of costs and lead to 517,000 fewer smokers, a 12.1% increase in tax revenue, and a 19.8% recovery in health spending after 2023-24. He emphasized the need for the government to integrate cost recovery into tobacco tax policies through automatic adjustments and to implement uniform FED rates for all cigarette brands, along with increasing taxes over the next three years.

Dr. Ziauddin Islam, former technical head of the Tobacco Control Unit at the Ministry of Health Services and National Regulation and Coordination, highlighted the alarming statistics on tobacco use in Pakistan, with 31.9 million adults aged 15 and above, or 19.7% of the adult population, currently using tobacco. He emphasized that tobacco use leads to over 160,000 deaths annually in Pakistan, amounting to 1.4% of the country’s GDP each year. Dr. Islam stressed the necessity of restoring Pakistan’s cigarette tax system, as the costs associated with smoking-related health problems far outweigh the revenue generated from cigarette taxes. He noted that in 2022-23, taxes covered only 16% of these costs, a significant decrease from 19.5% in 2019.

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