Capital Calling welcomes IMF recommendations for uniform tax on tobacco products

ISLAMABAD: Capital Calling, an Islamabad-based think tank, has welcomed the International Monetary Fund (IMF)’s recommendations for Pakistan to impose uniform excise rates on both local and foreign cigarette manufacturers.

It also appreciated the demand of former health minister Dr Nadeem Jan, who has called for a 50 per cent tax increase on cigarettes to make them harder to access for the masses.

The think tank has endorsed the minister’s statement rubbishing the propaganda that the rise in taxes will lead to the smuggling of cigarettes, resulting in a loss to the national exchequer.

According to estimates, cigarette prices are the cheapest in Pakistan compared to other regional countries, it said in a statement.

According to media reports, the IMF recommendation has suggested applying a consistent excise rate in one slab to all domestically produced cigarettes, regardless of the manufacturer’s origin.

It means local and multinational manufacturers will face no discrimination in taxes. Currently, cigarettes are taxed in two tiers, which is resulting low collection of taxation from the cigarette industry.

Furthermore, the IMF has also proposed subjecting e-cigarettes to taxation similar to traditional tobacco products, citing comparable health impacts.

This recommendation is strictly in line with the guidelines set by the World Health Organization (WHO), said Dr Hassan Shehzad of the International Islamic University. He said due to the two-tier system, multinational companies manage to place their cigarettes in the lower tier which results in a reduction in cigarette prices.

The objective of these recommendations is to ensure equitable taxation across cigarette products, regardless of their source.

The think tank stated that it is estimated that the government has faced Rs567 billion loss due to the influence of the international tobacco companies.

It said there is a dearth of research to measure the damage that smoking has done to society. The survey conducted to assess this damage is highly tilted towards economics, hence offering no solutions as to how to bring down smoking in society.

Similarly, there is no concrete media strategy to counter smoking and its psychological impacts.

It said the majority of smokers are in their thirties and there is a need to think about this age group formulating policies.

The institutions formed to counter smoking suffer from a lack of coordination and vision; hence, fast losing their relevance. Capital Calling has demanded a reset of the mechanism to counter tobacco and full implementation of IMF recommendations for uniform tax on tobacco products, thinking of it as the right step to take.

It has been reliably learnt that Capital Calling is the only independent think tank in Pakistan IMF has referred to whose report is in the reference section of its recommendations.