The high cost of low prices: Pakistan’s cigarette tax strategy

ISLAMABAD: Pakistan’s way of handling cigarette taxes is causing a stir globally, as it balances economic interests with growing health concerns.

The country’s loose tax regulations have resulted in the cheapest cigarette prices in the region, sparking a debate on the potential fallout of this unconventional strategy.

Dr Aman Khan from the Waseela Foundation explains the situation, highlighting the clash between economic goals and looming health issues.

The significant difference in prices between premium and value-for-money cigarette segments raises doubts about the sustainability of this pricing strategy.

Premium brands are notably cheaper in Pakistan as compared to other countries, prompting questions about the reasons behind the lenient tax policies.

Dr Khan suggests that the aim might be to make cigarettes affordable for a larger population with lower incomes.

However, he also points out the importance of the tobacco industry to Pakistan’s economy, warning of risks if taxes are increased.

Despite the short-term economic benefits, Dr Khan warns of more people smoking, leading to increased healthcare costs and reduced productivity due to health problems.

The long-term viability of Pakistan’s lenient tax policy is questioned, especially compared to neighboring countries with more health-oriented tax approaches.

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Looking at domestic tax policies, it’s evident that ‘Big tobacco lobbying’ has influenced decisions by the Federal Board of Revenue (FBR).

The introduction of a three-tier system, meant to fight the illicit market, caused substantial losses.

In contrast, independent decisions by the FBR, like abolishing the three-tier system and recent tax hikes, have been effective in boosting government revenues and discouraging tobacco use.

According to The News, the global community, including analysts and policymakers, is closely watching Pakistan’s unique approach to cigarette taxes, considering its broader impact on both economic strategies and public health.

As Pakistan deals with internal debates and global attention, it’s at a crossroads where economic interests meet the need to address public health challenges.