Academicians appreciate Finance Minister going ahead with tobacco tax reforms

Islamabad:  It is encouraging that Finance Minister Muhammad Aurangzeb gave out hope to the masses that the country could get $3 billion package from International Monitory Fund (IMF) considered to be vital for sustenance of falling economy, lauded the academicians on Monday.

Dr. Aftab Madni, dean of the Indus University, however, underlined the need to implement the recommendations of the IMF regarding tax reforms in a true spirit.

 “Pick and choose wouldn’t help the reform process” he said.

He stressed that the IMF has explicitly recommended that there has to be uniformed tax on cigarettes regardless of their national or multinational brand. This alone will generate revenue in billions.

He said cigarette is a non-essential item and the government wouldn’t face any public backlash if it moves ahead as per IMF recommendations.

He said that about 9 percent of Pakistanis are smokers and the volume of second-hand smoking still has to be explored. The cigarettes need to be made expensive in any case. 

It causes disease and deaths that have to be accounted for.

He appreciated Dr. Hassan Shehzad from International Islamic University Islamabad, for being the only researcher whose report has been referred to by the IMF in its recommendations for tax reforms.

He said that the report has clearly established a link between consumption and affordability. 

Dr Shehzad quoted the minister as saying, "The country’s current $3 billion arrangement with the fund runs out in late April and the government is seeking a long-term and bigger loan to help bring permanence to macroeconomic stability as well as an umbrella under which the country can execute much-needed structural reforms."

He added that reports have mentioned that cigarette industry is responsible for a loss of Rs567 billion to the national exchequer in less than a decade.

He said that the finance minister has a profound background in banking and it is normal for a banker to understand the volume of losses a product injurious to human health can cause.

Imposing uniformed tax on tobacco products is too little and too late, he said, but it has to be done. Dr Shehzad is a leading researcher in the country with an impact on policy making.