Improve Revenue by Imposing Taxes on Non-Essential Items like Cigarettes, Urges IMF
Published on: April 23, 2024.
Filed under:
IMF Recommends Overhauling Tax System and Taxing Non-Essential Items Including Cigarettes in Pakistan
In a bid to boost revenue and improve public health, the International Monetary Fund (IMF) has urged Pakistan to revamp its tax machinery and implement taxes on non-essential items, including cigarettes. This recommendation has garnered appreciation from health advocates and experts.
Professor Muhammad Zaman, the head of Zaman Research Center at Quaid-i-Azam University (QAU), emphasized the importance of implementing the IMF’s recommendations during this critical time for the government to address economic issues. He highlighted a study by Capital Calling, an Islamabad-based think tank, cited in the IMF report, which revealed that cigarette consumption has decreased due to higher prices. Professor Zaman stressed the need to consider the societal cost of smoking in terms of morbidity and mortality.
Pakistan’s tax system, particularly in the cigarette industry, has significant flaws, according to the Sustainable Development Policy Institute (SDPI), resulting in a loss of Rs567 billion over the past seven years. The influence of multinational cigarette companies on policymakers was also exposed in the SDPI study, particularly in the implementation of a three-tier excise duty structure prioritizing revenue collection over public health considerations in 2017. However, subsequent analysis proved this approach ineffective in generating revenue.
The SDPI research highlighted successful strategies employed by high and middle-income countries, wherein high cigarette taxes were used to reduce consumption and increase government revenues. However, Pakistan lacks a coherent strategy to utilize cigarette taxation and pricing as a public health tool.
Dr. Hassan Shehzad from the International Islamic University Islamabad (IIUI) echoed sentiments from the World Health Organization (WHO) in emphasizing the need to safeguard tobacco tax policies from the vested interests of cigarette companies. This is crucial to ensure effective development, implementation, and enforcement of public health initiatives.
Incorporating the IMF’s recommendations and enacting tax reforms, especially on non-essential items like cigarettes, can contribute to both economic growth and a healthier population in Pakistan.
**Source:** [ISLAMABADPOST](https://islamabadpost.com.pk)
