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Tobacco has negative contribution in Pakistan’s economy

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MURREE: May 28, 2023: Increased tobacco taxation is a win-win situation for the government and people of Pakistan provided that the government remains steadfast on its decision of increasing tobacco taxation. This arguments was raised during an event organized by Society for the Protection of the Rights of the Child (SPARC) with Federal Board of Revenue FBR and Elected Representatives. The event explored economics of tobacco, health cost burden and tactics of tobacco industry in presence of key journalists to gather support for Federal Board of Revenue’s (FBR) track and trace system.

Malik Imran, Country Head, Campaign for tobacco-free kids (CTFK), mentioned that tobacco industry cased 615 billion rupee economic burden to our country therefore it must be taxed heavily and regularly. He mentioned that due to government’s decision of increasing Federal Excise Duty (FED) on cigarettes in February 2023, an additional 11.3 billion FED revenue and 4.4 billion VAT revenue was obtained in fiscal year 2022-23 . This additional revenue makes up 0.201% of our GDP which is a significant boost for a struggling economy like Pakistan. Imran stated, that the Illicit trade is an exuse used by the tobacco industry to avoid taxes. In reality, the tobacco industry practices underreporting where they hide their actual production figures to avoid taxes. Cigarette manufacturers also shift the tax burden to consumers to increase their own profitability.

Mr. Rizwan Sarfraz, Additional Project Director, Track and Trace System, FBR, mentioned that the track and trace system (TTS) implemented by the Federal Board of Revenue (FBR) in Pakistan has achieved several achievements. These include technology based monitoring, increased transparency, improvement in tax compliance, and reduction in the prevalence of counterfeit goods in the country. He mentioned that since the the production of cigarettes sticks decreased 6.5% from July-December 2021 to July-December 2022 and during the same time FBR’s tax collection improved by 11.75. This is a major achievement of Track and Trace System.

Nisar Ahmed Cheema, Member National Assembly, said all stakeholders must work tirelessly to ensure that health of Pakistanis doesn’t suffer at any cost. He mentioned that FBR’s track and trace system must be implemented in all companies so that important tax revenue is not lost. He also urged the parliamentarians to work for consistent and adequate increase in tobacco taxation.

Dr. Ziauddin Islam, Former Technical Head, Tobacco Control Cell, Ministry of Health, said that the annual 170,000 deaths from tobacco and 615 billion economic burden require sustainable measures. Pakistan should increase tobacco taxes on regular intervals to reduce consumption and generate revenue.

Khalil Ahmed Dogar, Program Manager SPARC said that to protect the children from harms of tobacco all stakeholders must cast their differences aside and unite to protect our children and youth from an industry which is causing billions of loss to the national exchequer. Increasing tobacco taxes is such a step which should be regularly implemented.


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