ISLAMABAD: The Federal Board of Revenue (FBR) has received a budget proposal from health advocates to increase taxes on tobacco products by 37 percent through Finance Bill 2024 to generate additional revenue of Rs 40 billion in 2024-25 and bridge the gap in health costs associated with smoking.

This proposed increase would translate into a substantial rise in government revenue, estimated to reach Rs 336 billion from the current Rs 240 billion. The intervention would also significantly impact health costs associated with smoking, projected to be reduced from Rs 615 billion to Rs 418.2 billion, effectively reducing the gap between revenue and health costs to Rs 82 billion.

Malik Imran Ahmad, Country Representative Campaign for Tobacco Free Kids (CTFK) informed FBR that the effectiveness of high tobacco taxation as a vital measure in combating tobacco consumption, as advocated by the World Health Organization (WHO).

The industry can absorb at least a 40% increase in taxes, and the IMF and World Bank have recommended Pakistan introduce a single-tier tax structure for cigarettes. Despite efforts to increase taxes, low cigarette prices persist, contributing to sustained high consumption levels. By adopting these reforms, Pakistan can make cigarette taxation more effective and align it more closely with international best practices.

In the budget proposal, Mehboob Ul Haq, Chief Executive Officer at the Human Development Foundation (HDF), underscored the immense benefits of boosting tobacco taxation, stating, “Tobacco taxation is a globally recognized and effective tool to reduce affordability and consumption.” He stressed the urgent need for stringent regulation of all tobacco products, reaffirming HDF’s steadfast commitment to forging a healthier and more prosperous Pakistan, where the well-being of our youth is paramount.

Copyright Business Recorder, 2024