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NA recent newspaper articles, the lobby of the tobacco industry has called on the government to review their policy of imposing heavy taxes on nicotine pouches and smoking tobacco products to counter illegal trade.
The argument that has been repeated for many years before each budget cycle, has been designed to eliminate strict rules and ensure that industry profits have not been reduced. Meanwhile, the tobacco control framework convention, in which Pakistan is a signator, encourages all parties to the tobacco industry needs to pay at least 70 sales price in taxes.
There is a series of misleading statistics in the center of this story. The industry claims that duties have increased, such as a 2200 % increase in vap products, has forced a business like Pakistan Tobacco company to withdraw from the market. The claim is wrong. No tax was levied on any product in the last budget.
It is further claimed that the space has allowed smuggled products to dominate the market, which is estimated at about 34 billion rupees in the state’s income.
The argument that heavy taxation leads to the spread of illegal products and is neither new to Pakistan nor individuality. However, this is a self -service claim. The industry axis for smoking products, waping devices, oral nicotine pouches and other alternatives is part of a wider strategy that aims to re -establish itself as a supporter of loss.
However, the strategy to reduce the damage is subject to “policy support” by governments and public health regulators. It is hardly like an industry, as an industry has voluntarily adopted to take steps to reduce the damage caused by its product. The World Health Organization has warned that the tobacco industry produces products that kill half of its consumers and have to persuade children and young people to ensure permanent profit.
Looks closely at the numbers. In a previous deal, the tobacco industry was able to get a tax rate per kilogram per kilogram on nicotine pouches that was not organized by the Ministry of Health by an ordinance or SRO. While sales were produced Rs 9.6 billion, the tax contribution from the product line is less than Rs 90 million. If the product was imposed on a fair tax, the government could have collected billions of rupees. Just banning these products can save the country a reduction of Rs 715 billion in tobacco health burden.
The tobacco industry claims that 54 % of cigarette consumption comes out of the economy. The number is flown to support the misrepresentation. The fact is that two major tobacco companies account for 98 % of sales in Pakistan. Also, illegal tobacco is a problem. And not taxing. Illegal market is not due to taxation but due to the failure of implementation. This is in the rule, not in tax rates on tobacco products.
The situation is compared to a leak bucket. The purpose of the government is to pay the bucket with tax tax. However, the industry claims that high tax only works to expand the holes through which valuable funds escape. The imitation is deprived of an important point: leakage is not due to high tax, but because of the failure to enforce regulatory measures. Repeated appeals from authorities to “clamp” the tobacco industry illegal trade, essentially, are trying to remove the accusation in their own way. Instead of resolving the integrity of their own supply chains, the industry demands crackdown on smuggling, helping them to blur the line between regulated and unorganized markets. Internal Revenue Enforcement Network, a subsidiary of the FBR, has a long list of tobacco products that are manufactured by Big Tobacco and illegally sold.
The industry claims that duties have increased, such as a 2500 % increase in VIP products, forcing companies like PTC to withdraw from the market.
Even more complicated industry claims that reduction in tobacco cultivation will lead to the same reduction in taxable income. Last year, when the industry claimed low production of crops and predicted low tax collection, the data presented by the stock exchange, the Pakistan Tobacco Board, the FBR and the Bureau of Statistics did not support its claims.
The government needs to set the target of tobacco tax collection 500 billion or more. Instead of accepting responsibility for their share in shrinking the regulated market, the industry is talking about illegal products. This story is a trick that is designed to prevent further regulatory measures.
Global change in smoky alternatives from firearms is underway. However, this transition is being manipulated for profit rather than public health. The industry claims that by 2035, more than half of its revenue will be from smoky products. The government needs to assess the results of “addicts”. Nevertheless, this place is without willingness to fulfill the same financial responsibilities. Their selected acceptance of tax, for example, is a mere renovation on nicotine pouches, indicating their extensive strategy to avoid their rules.
Critically, the statement that suppressing heavy taxes and enhancing illegal trade is a myth that relieves the complexity of the industry in both the generation and benefit of the underground market. Instead of using high taxes to promote public health and ensure that all participants contribute to their fair share, the tobacco industry uses such arguments to delay the necessary reforms. The claim that the plight of the industry has increased by illegally taxing the industry has ignored the basic fact that tobacco tax is the most powerful source of reducing tax consumption and increasing tax. They work to eliminate harmful methods and ensure that people do not bear inappropriate burden from the external things of tobacco use.
The time has come for Pakistan to adopt policies that reflect the full cost of tobacco use. Strong tax, transparent and completed through a strong regulatory framework, is essential not only for the recovery of lost revenue but also for the protection of the public health.
Public health supporters and scholars should insist on honest conversations about tobacco control. They must cope with the movement of the industry, which shows how it connects the data and shares the disciplinary framework in its benefit.
The story presented by the tobacco industry is a dangerous turn from the reality of tobacco control. The time has come for Pakistan to reject sharp claims and accepted a tax government that is responsible for the tobacco industry for its measures.
The author is the head of the Center for Health Policy and Innovation at the Sustainable Development Policy Institute. It can be arrived at Wasif@sdpi.org
