Higher excise duty on cigarettes: tax authorities bound to follow WHO recommendations

Pakistani tax authorities are bound to follow recommendations of the World Health Organisation (WHO) for substantially raising tobacco excise duty on cigarettes, ie, at least 70 percent of the retail price through changes in the existing FED slabs applicable on cigarettes.
Talking to Business Recorder on Friday, Khurram Hashmi National Co-ordinator, Coalition for Tobacco Control - Pakistan, said that Pakistani is also bound to follow the Article 6 of the WHO Framework Convention on Tobacco Control (FCTC) which mainly focuses on taxation and price measures to reduce the demand for tobacco in Pakistan. In Pakistan, overall incidence of duties and taxes on cigarettes is around 65 percent, which need to be taken to at least 70 percent of the retail price.
The incidence of taxes particularly excise duty structure need to be increased on tobacco in Pakistan to bring it in line with the WHO recommendation, so that they account for at least 70 percent of the retail price. Moreover, the influence of the multinational cigarette manufacturing companies on the government departments like Federal Board of Revenue (FBR), revenue collection agency for setting excise duty rates should be stopped. This would result in proper taxation, excise duty on cigarettes as per recommendations of the WHO.
Talking about taxation on cigarettes, Pakistan has multi-tier based system when it comes to tobacco taxation and commonly cheap cigarette covers under the lower tier of taxation which has less impact of the tax as the tobacco industry absorbs the burden within the price of the packs instead of putting it on the smoker." The National Co-ordinator observed. "Pakistan requires a tax system which has same effect on every category of cigarettes resulting in higher prices of packs at consumer end. And if the government of Pakistan allocates a percent or two of that revenue collected from tobacco taxes for health programs especially towards the victims of tobacco, we may very well have sound funds at our disposal for overall tobacco control efforts in the country, Khurram Hashmi maintained.
One of the key tax issues is to control the influence of leading cigarette manufacturing on the policy makers in the Federal Board of Revenue (FBR) at the time of budget to ensure upward revision in the FED slabs on cigarettes, he added.
In an exclusive chat with Business Recorder, Anuradha Khanal, Country Co-ordinator, Pakistan Programs at the Campaign for Tobacco-Free Kids said one of the most significant outcomes of the last international conference (COP) effecting Pakistan was the decision by countries to unanimously adopt Guidelines for Article 6: Tax and Price Measures to Reduce the Demand for Tobacco. The guidelines provide critical guidance to countries, including Pakistan, on best practices in tobacco tax and will be invaluable in assisting Pakistan to meet its obligations under Article 6 of the WHO Framework Convention on Tobacco Control (FCTC).
She said that the WHO recommended raising tobacco excise taxes so that they account for at least 70 percent of the retail price. Pakistan's taxes fall well below this recommendation and a significant increase in tobacco taxes is needed to reduce tobacco use among Pakistanis. Increased tobacco taxes remain the most effective measure to reduce tobacco use - particularly among youth. A strong increase in tobacco taxes will be a significant step in reducing the deadly toll of tobacco use, which kills approximately 110,000 Pakistanis each year.
In addition to requiring Parties to increase tobacco taxes, the FCTC also obligates parties to implement other proven measures to reduce tobacco use including 100 percent smoke-free spaces, graphic pictorial warning labels, and comprehensive bans on tobacco advertising, promotion and sponsorship, Anuradha Khanal added.
When contacted, Caroline Renzulli International Communications Campaign for Tobacco-Free Kids informed that though Pakistan does have a smoke-free law, stronger enforcement of this law is needed to protect all Pakistanis from the dangers of second-hand smoke. Among Pakistani youth aged 13-15, 34 percent report being exposed to second-hand smoke - a deadly mixture of more than 7,000 chemicals including hundreds that are toxic and at least 69 that cause cancer.
Pakistan does have graphic warning labels, but the WHO recommends implementing warning labels that can be rotated so that the labels remain impactful over time - this has not been done in Pakistan despite the two year mandated rotation by the law, she said.
She said that the current graphic health warning has lost its impact on the smokers as they are now used to the image. The purpose of the having multiple graphic warnings and rotating these after certain period is to keep reminding the smokers; both new and old, about the serious health hazards they are heading towards if they kept smoking." The CTC-Pak National Co-ordinator told the Business Recorder. "The present image is no longer serving that purpose.
Caroline was of the view that smokeless tobacco use is high in Pakistan and smokeless products are not included in many of Pakistan's tobacco control laws. For example, smokeless tobacco products are not required to have warning labels which are an effective means to warn of the dangers of tobacco use.
Lastly, point of sale advertising remains an issue in Pakistan. Tobacco marketing at the point of sale (POS) includes advertising, promotion (price discounts and product giveaways), and product display at any location where tobacco products are sold. POS marketing weakens the effectiveness of tobacco control laws, and exposes Pakistanis to tobacco industry marketing tactics that are intended to increase the sale and consumption of tobacco products. Youth are particularly vulnerable to these tactics and POS marketing makes it harder for smokers to quit, she added.
There are few restrictions on advertising and promotion in Pakistan. Print advertising is prohibited, except for advertisements less than one square inch in the inside portion of publications that are not intended for young people. TV and radio advertising is limited to the hours between 3:00 am and 4:00 am. Billboards and other outdoor print media may not exceed square meter. Most other forms of advertising and promotion are allowed. All permitted advertising must be accompanied by a health warning. Although financial or other sponsorship by the tobacco industry is not prohibited, publicity of the sponsorship of events is prohibited.
The Ministry of Health has issued warning containing both a picture and text that must be placed on all cigarette packs. The warning must occupy 40 percent of the pack and be placed on the front of the pack in Urdu and on the back of the pack in English. Health warnings are not required on smokeless tobacco products. The World Health Organisation recommends raising tobacco excise taxes so that they account for at least 70 percent of retail prices. Tobacco excise taxes in Pakistan are well below these recommendations, Caroline added.