In the wake of the Murree snowfall tragedy that resulted in the deaths of several tourists, the Pakistan Tehreek-i-Insaaf (PTI) has landed itself in hot waters once again in lieu of the mini-budget and its upcoming inflation bomb on the helpless Pakistani public.
According to Baaghi TV reports, the purpose of the mini-budget being presented by the PTI govt is to ensure timely payment of upcoming installments of the International Monetary Funds (IMF) loans. However, as usual, the PTI government has failed to levy taxes where needed instead they have focused on surcharging milk among other essential products.
Health Levy Bill:
In 2019, the Cabinet approved of a Health Levy Bill that would have raised prices of every 20 cigarette packs by Rs. 10 and of every 25 ml sugary drinks by Rs. 1. At the time, it was estimated that the bill would generate up to Rs.55 billion in revenue to sustain healthcare projects under the leadership of the ruling PTI government.
According to reports at the time, the serving Prime Minister and former cricketer, Imran Khan, had heavily endorsed the idea of levying health taxes in several official meetings. However, the bill was absent from the 2019-2020 budget, much to the surprise of the tobacco control community. Meanwhile, according to an article published in Dawn News, based on a study by the Pakistan Institute of Development Economics, Pakistan is currently battling a health burden of up to Rs.615 billion. This estimate is five times higher than the revenue generated from tobacco taxes, of approximately Rs.118 billion. It is the need of the hour to impose a health levy bill that will raise the price of cigarettes and lead to reduced rates of tobacco consumption.
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To date, Tobacco Control Activists (TCA) have expressed concerns on the matter and demanded clarification regarding the absence of the Cabinet-approved bill. Back in 2020, the Federal Board of Revenue had issued a statement concerning the bill that implied it needed to be considered by the Ministry of Law as the FBR “cannot levy health tax“.
IMAGE CREDIT: fbr.gov.pk
Health Contribution Action Act:
According to the TCA, the act can be perceived as a ‘delaying tactic’ by the Ministry of Finance to appease tobacco corporations. At the time, the TCA filed a petition with the Federal Ombudsman to demand that the bill be implemented in the budget 2019-2020. Following this, a Health Levy case was heard on October 27, 2020, but no objection was made by the Ministry of Finance and the bill was forwarded to the Ministry of Law for legal consultations.
By 2021, the Ministry of Law reached its decision to allow the health levy bill to be imposed, however, it was then forwarded to the Ministry of Health which is seeking the position to allow changes to the proposed bill. If the Health Ministry is allowed to do so, the process of implementation will be further delayed leading to more extensive damage to the country and its youth.
Prevalence of tobacco use in Pakistan:
It is pertinent to note that up till July 2021 the Ministry of Health was working on an alternate bill “Health Contribution Action Act” but so far no changes have been implemented. Meanwhile, the prevalence of tobacco use in Pakistan is reported to be:
- Tobacco use at 23.9 million.
- Smoking at 15.6 million.
- Smokeless Tobacco at 9.6 million
- Tobacco use in children between the ages of 13 to 15 at 10.7%
In addition, an estimate of 83 billion cigarettes was produced in the year 2017-2018. However, tax rates have been maintained at 33% since 2017, with no change at all although tobacco companies & FED have been making a net profit of approximately 64.4% since the fiscal year 2017-2018.
According to Baaghi TV reports, the World Bank has suggested an increase of up to 30% in tobacco tax, annually, to ensure a reduction in tobacco usage as well as a growth in tobacco revenue.
Khara Sach: How much does PTI stand to gain from the mini-budget?
Keeping in line with the above argument that the government needs to implement heavy taxes on tobacco products including cigarettes, leading investigative journalist Mubasher Lucman has argued in his show Khara Sach that “greed and fear” are two things that predominantly coerce an individual towards a dangerous path. Lucman argued that it is these two along with other “human weaknesses” that enable corrupt leaders and multinational organizations to manipulate individuals for personal gain.
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In the 11th January 2022 episode of Khara Sach, Lucman argued that we are a country where integrity and performance are overlooked in comparison to “establishment favorites”, where the fate of an individual is decided upon not by what is important, but what is favorable to a few, that holds power. He added that we live in a country where it is more important for the leadership to maintain its hold on the people rather than to perform well for the prosperity of the state. He continued that our priority is not on winning a party ticket so we can make a positive change, but on whether we will garner guaranteed success, with little thought to what comes after.
According to Lucman, we live in a country where the Government body itself is associated directly or indirectly with the mafia’s: sugar, land, poultry, and others, to name but a few. Where the influential invest in the individual on the basis of bringing revolution. This revolution is never ensured instead, the government or other bodies of authority, often revert to the old and redundant system of disarray. Moreover, when they fail to ensure the promises they made, they either do what their predecessors did or they blame the ‘conditions they were dealt’ for their faults.
Referring to the Murree snowfall tragedy, which is a potent example of the government’s negligence and incompetence according to Lucman, the PTI govt set the trap to prey on the victimized public. Lucman argued that even though the PTI government claimed accountability against the corruption and generational political families namely the Pakistan Peoples Party (PPP) and the Pakistan Muslim League-Nawaz (PML-N), they themselves are looking to cooperate with the said families on matters including the mini-budget. The main agenda behind this is to hide the incompetence of the PTI govt. according to Lucman.
Introducing his guests Hina Pervez Butt (PML-N), Mussarat Jamshaid Cheema (PTI), and Ali Badar (PPP), Pakistan’s leading journalist posed the question, how much tax will PTI govt impose on tobacco and its associated products? To which the PTI leader responded that the mini-budget has been finalized. Mussarat Cheema added that Prime Minister Imran Khan and the Finance Minister are aware of the issue, we will follow up till we are able to implement taxes on tobacco products. Cheema added, “we need to implement the highest possible tax levy on such products to gain two benefits. Firstly, to provide relief on essential items and secondly, to make tobacco products so expensive that even a middle-class man will not be able to afford it”.
Mubasher Lucman questioned, “How much revenue does the PTI govt stand to gain from the mini-budget?” In response to this Cheema said, “An approximate 200 billion revenue is expected from increasing taxes on essential items such as milk, sugar, flour, and others”. Cheema further added that the purpose of the mini-budget is to enable the PTI govt to pay off the upcoming installments of the IMF loans.
Purpose of the Mini-budget:
When questioned by Lucman whether commodity prices are rising due to inflation in the global market, Cheema argued, “No. It is based on two factors. One being, because of the past actions of the PPP and the PML-N, and secondly, because of the ‘ruined’ agricultural sector”. Cheema elaborated that the previous governments failed to ensure enough food for the public which led to the decision to import food items from other countries.
In addition, Mubasher Lucman questioned, “what was the agricultural GDP contribution in 2005, under the leadership of former President Pervez Musharraf?” Cheema responded that she is not aware of the exact figures. Following this, Lucman argued that in 1947, post-Independence, the agricultural sector accounted for 56.4% of GDP whereas, last year under the PTI govt. led budget it was estimated to be -2.4% GDP. Lucman questioned, “did the PTI govt. form a commission to investigate why this happened?”
Keeping with the PTI government’s previous tactics, Mussarat Cheema responded, “the public knows what is happening to us”. Lucman rebutted by saying that whatever is happening is being faced by the public, and not the govt, before posing his next question, “Would you not agree that there is an influx of inflation due to the instability in the international market?”
Cheema deflected the question and replied, only PM Khan has addressed the real issues of the ‘kisaan’, of the agricultural sector. In seven years times, we will not have to import Olive oil because we will be sufficient enough to export it. These changes she argued, will not bear fruit overnight but will take time.
Why is govt levying taxes on essentials?
Lucman continued to question, “Based on what you have said, my understanding is that we are going to levy a surcharge on wheat, gas, and oil, then why are we not increasing taxes on tobacco, cigarettes, niswaar, cigars, and other products, in accordance with international fluctuations?” He added, that an estimated 12 pounds worth of cigarettes is sold for approximately Rs.140 in Pakistan. Why is it less than a pound?
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He continued that if the PTI govt wants to generate a revenue of 200 billion, then they should consider raising the levy. Referencing the Statistical Bureau of Pakistan (SBP), Lucman argued, if you are to sell 20 crore cigarette sticks in a day, you can add Sheesha (Hookah) and tobacco in this, at international rates you will be able to generate up to almost 500 billion rupees. Based on these figures, you will not have to raise taxes on baby formula and milk, you will not have to increase the price of electricity consumption per unit, or charge surplus on gas. “Is there any justification then, for why the govt refuses to raise taxes on tobacco products instead of unnecessarily burdening the public?”, argued Lucman.
During the course of the talk show Khara Sach, it was argued that we would rather endanger the lives of our children and youth instead of levying charges on tobacco. Along these lines, Lucman added that while he himself is a victim of this, and cannot claim sainthood, the matter of fact remains that up to 12,000 children are getting addicted to cigarettes (and other tobacco products) every day because the PTI govt, especially PM Imran Khan, is accepting funds from international tobacco companies and is thereby, not in a position to levy taxes against them.
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Referencing an article published in Dawn News on the 11th of January, 2022 Lucman quoted that Prime Miniter Imran Khan received a cheque from Guy Meldrum, regional director of the British-American Tobacco, for the Diamer-Bhasha and Mohmand Dams Fund. Reading through the article, Lucman said, “It is a clear violation of Article 5.3 of the World Health Organisation’s (WHO) Framework Convention on Tobacco Control (FCTC) which says that government representatives cannot meet and receive funds from tobacco companies even under Corporate Social Responsibility (CSR) activities as it is also a way of advertising, according to the country representative of the Tobacco Free Kids, Malik Imran”. (DAWN)
“This is in front of you, either prove to me this is inaccurate or come clean. I can guarantee that in the future we will find that these companies are funding our cancer hospitals”, commented leading investigative journalist, Mubasher Lucman. He added that this is the reason why our govt is letting tobacco companies do whatever they want because they are funding our projects.
In response, PML-N’s Hina Pervez Butt stated, “If you see the scrutiny report you will be able to trace the received funds with transparency. PM Khan talked about the national security policy. Obviously, the most important aspect of that is the country’s economy. So, if we are forced to live under the leadership of a state head who single-handedly drops the GDP from 5.8 to 3, who has taken funds from India and others (based on the scrutiny report), and yet they are not mentioned then this is a ‘big question mark’ on the national security policy”.
Following Butt’s observation, Lucman added, “is it not a violation of human rights that a child is not allowed the opportunity to afford milk but should have his/her hands on cigarettes?” In response, Butt referred to the above-quoted Dawn article and argued that this is one violation. The ring-road scandal, medicine taxes up to 5%, sugar scandal, increasing prices up to 400%, making profits at the benefit of Coronavirus funds, and BRT (Bus Rapid Transit) are some of the other violations which according to foreign funding have been shown to be a threat to the national security policy.
Highest Corruption Index under PM Khan?
Butt proceeded to comment that Transparency International (A German association founded in 1993 by former World Bank employees) has said that there is an increase in corruption index under PM Khan’s govt. Butt argued that this can be seen from PM Khan’s decision to change his Finance Ministers four times since coming into power in 2018.
Butt continued: “Your economy rules your govt., if your economy is not strong, it affects your national policy. We cannot pay the defense budget because our economy is not thriving”. Referencing the Murree tragedy Butt continued, is “total negligence”. An area, that is so small, was packed with up to 1 lac 63 thousand cars where PML-N govt only allowed up to 25,000 cars during their tenure. She added that the govt has failed.
She added, there was no electricity for up to 2o hours, hotel expenses went through the roof meanwhile, Federal Minister Fawad Chaudhry was seen tweeting that the economy is thriving. Moreover, quoting Sadaqat Abbasi, Hina Pervez Butt said, as many as the cars are coming, we will make more revenue.
Directing the conversation to PPP’s Ali Badar, Lucman questioned, “Why are they [PTI Govt] not adding taxes on tobacco products?” To which Badar responded, “there is a conflict of interest. This is straight-forward bribery via PM Khan”.
Lucman further questioned, “Is it possible in any other nation to give and/or receive donations as a head of state?” Badar responded, “this is making a statement, you facilitate us and we will give you money. You can see this from the mini-budget where PM Khan has levied taxes on baby products but not on tobacco. If petrol and other prices are rising internationally, then they should correlate tobacco prices accordingly”.
Furthermore, Mubasher Lucman commented that the govt has put in up to 600 billion dollars for the health budget alone, which does not include cardiac diseases. In response to a statement by Lucman, PPP’s Ali Badar stated, “people are dying because they have no means to a basic living. We have NCIVD (National Institute of Cardiovascular Diseases Sukkur) hospitals in Sindh but the public is not aware of them. Badar continued that governance is about fixing public policy, it is about formulating strategies, it is about focusing on implementation and about facilitating the public, it is about performing in your area so that people can improve”.
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Moving forward: Will PTI levy taxes on Tobacco?
In lieu of this, Mubasher Lucman turned once again to PTI’s Mussarat Cheema, “Can you guarantee me on record, that tobacco companies are not ‘donor agencies’ for Shaukat Khanum Memorial Cancer Hospital (SKMCH)”? Cheema responded, “You are implying that PM Khan is doing so for personal benefit. He is doing whatever he can for the benefit of the public. I am not a focal person for the SKMCH, do not bring it into politics. Principally, I agree with you that the govt should impose taxes on tobacco products as per international rates”.
Once again, PML-N’s Butt referred to foreign funding saying, “First of all, if it is proved that SKMCH is functioning under funding from tobacco companies, then this raises further questions. The scrutiny committee has also raised several questions, the Election Commission of Pakistan (ECP) says the same thing that foreign funding should not be received for any political party”.
Khara Sach concluded with Lucman reiterating that genuine opposition is the true strength of diplomacy and a good check and balance for the government in its departments. He expressed hope that the opposition and the govt should come together to eradicate tobacco usage by taking the first step towards imposing heavier levies on tobacco and its associated products.
To watch the complete episode of Khara Sach, click here.
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