Tax Talks

ISLAMABAD: Speakers at a seminar on Monday expressed serious concern that the absence of taxation on smokeless tobacco products and minimal regulation on nicotine pouches has allowed the industry to target consumers through alternative channels. The seminar titled “Taxing Tobacco:

A Path to Reducing Consumption and Saving Lives”, was organized by the Sustainable Development Policy Institute (SDPI), served as a pivotal forum to address the critical need for a robust and sustainable tobacco taxation policy in Pakistan.

Experts believed that the current two-tiered tobacco taxation system enables the tobacco industry to undermine the impact of tax increases. By preemptively raising prices ahead of budget announcements, the industry dilutes the intended public health benefits.

The absence of taxation on smokeless tobacco products such as Naswar and the minimal regulation of nicotine pouches further exacerbate the issue, creating loopholes that allow the industry to target consumers through alternative channels.

Against this backdrop, the seminar served as a call to action for developing a structured, long-term taxation policy that ensures equitable coverage of all tobacco products, reduces affordability, and mitigates health risks.

Drawing inspiration from the World Health Organization’s Framework Convention on Tobacco Control (FCTC) and the MPOWER framework, discussions revolved around adapting global best practices to the Pakistani context. Speakers underscored the importance of introducing health-specific taxes to fund public health programs, combating cross-border smuggling through regional collaboration, and expanding the track-and-trace system to include exports and smokeless tobacco products.

The recommendations were aligned with the WHO’s guideline of achieving a minimum 70% tax share in the retail price of tobacco products, a benchmark Pakistan has yet to meet.

Syed Wasif Ali Naqvi, Senior Research Associate and Head of Policy Advocacy and Outreach at SDPI, reiterated that tobacco taxation is a proven tool for reducing tobacco use and generating revenue. He acknowledged the persistent challenges posed by a lack of long-term policies and industry interference.

Dr Waseem Iftikhar Janjua highlighted the irrationality in the tobacco taxation system of Pakistan and emphasized the necessity of a progressive taxation policy to reduce the affordability of tobacco products while aligning with global health standards. He highlighted the disparity between Pakistan’s tobacco tax rate and the WHO-recommended benchmark, advocating for regular adjustments to account for inflation.

Dr Waseem also called for comprehensive policies governing nicotine pouches and smokeless tobacco products, given their growing market share and the absence of regulation. His analysis of loose cigarette sales—a prevalent practice among youth—underscored the need for stricter enforcement to deter initiation and reduce affordability.

Asif Iqbal stressed the importance of a stable 3-5-year taxation framework to address the uncertainties and reactive measures that dominate annual budget cycles. He pointed to the widening tax gap between economy-tier and premium-tier brands as a critical area for reform, advocating for gradual increases in economy-tier taxes to minimize disparities.

Khurram Hashmi, Senior Technical Lead, Vital Strategies, focused on countering the tobacco industry’s narrative by highlighting stringent policies’ health and economic benefits. He called for a unified approach among anti-tobacco stakeholders to ensure consistent advocacy and influence during budget deliberations. He underscored the goal of prioritizing public health over industry profits through equitable and effective taxation measures.

Source: Business Recorder, 2024