PESHAWAR: A study concluded that in the South Asian region, cigarette prices are the cheapest in Pakistan.
The study titled “Estimating Price Elasticity of Cigarettes and Chewing Tobacco in Pakistan: Evidence from Data at the Microscopic Level” urged policymakers to increase taxes on tobacco products to take advantage of the purchasing power of young people.
The study said that the tobacco industry in Pakistan opposed any tax increases that could raise prices, arguing that with around 40 percent illicit trade, tobacco consumption could remain unchanged, but the country would certainly lose tax revenue.
In the absence of reliable estimates of price elasticities and illegal trade, policymakers often turn to industry data and decide which tax regimes can favor them, he said.
The latest example dates from 2017, when the industry obtained a favorable tax regime through the introduction of a three-tier system without restricting the leveling of brands. As a result, the second tier brands have been moved to the third tier (with the lowest FED rates) by the industry, driving down the prices of cigarettes.
The study indicates that from a policy-making perspective, the introduction of a three-tier tax structure by the government and the subsequent increase in cigarette sales confirms the validity of these findings on price responsiveness. of demand for tobacco.
He said that based on the data and figures, the study would support the idea that increasing taxes would reduce demand for cigarettes without increasing illicit trade, as tobacco companies argue when they oppose any increase in tax rates.
With approximately 24 million active adult tobacco users, Pakistan ranks among the largest tobacco consuming countries in the world. The prevalence rates for men and women are 32.4% and 5.7%, respectively.
Considering that tobacco consumption weighs heavily on human health, Pakistan needs strict tobacco control measures, he said, adding that the country has already signed the WHO Framework Convention on Tobacco Control. in 2055 and has since introduced various non-tax policies, including picture warnings. on cigarette packs; smoking bans; “No smoking” signs in public places and vehicles; bans on the sale of cigarettes to minors, active advertising campaigns and distribution of free samples.
However, policy implementation is generally weak and raises concerns that, contrary to its commitment to reduce smoking prevalence by 30 percent by 2025, the trend may actually increase in Pakistan.
The study indicated that the weakest area of action in the country’s fight against tobacco is its fiscal policy when it is an effective tool to reduce tobacco consumption. Globally, there is ample evidence of tobacco tax policies that simultaneously lead to reduced tobacco use and increased income.