ISLAMABAD: Health activists and civil society organizations are urging the Federal Board of Revenue (FBR) to take immediate action by implementing the Health Ministry’s recommendation for a substantial increase in tobacco taxation for the fiscal year 2024-25. The call comes as part of efforts to address the economic and health costs associated with tobacco use.
Low cigarette prices have been identified as a significant factor contributing to the initiation of smoking among children and youth. The resulting health burden, including illnesses and premature deaths related to smoking, imposes substantial economic costs on Pakistan’s GDP annually. To mitigate these losses and protect public health, comprehensive strategies are needed.
Recent Reforms
The recent Federal Excise Duty (FED) reforms on tobacco have already demonstrated promising results in terms of revenue generation. From July 2023 to January 2024, tax collections have exceeded Rs 122 billion, with projections for the full year surpassing Rs 200 billion. Additionally, an estimated Rs 60 billion in General Sales Tax (GST) on cigarettes is expected for the fiscal year 2023-24. The combined impact of FED and GST is estimated to be around PKR 88 billion, marking a remarkable relative growth of nearly 49% compared to the previous year.
The Way Forward
By increasing taxes on tobacco products, Pakistan can achieve several critical goals:
- Economic Stability: Taxation serves as a key revenue source for the government, contributing to budget stability.
- Healthcare System Relief: Higher taxes can alleviate the burden on the healthcare system by reducing smoking-related illnesses.
- Youth Protection: Stricter tobacco control policies can keep young people safe from the harms of tobacco use.
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