Towards the end of the last month, the news about a meeting between the regional director of the British American Tobacco (BAT) and Prime Minister Imran Khan came as a surprise to many. This representative of the cigarette manufacturing industry met the prime minister at his office and presented a cheque worth Rs5 million for the Diamer-Bhasha and Mohmand Dams Fund.
The photographs of this meeting and the very gesture of handing over the cheque were shared with the media and within no time these became viral on social media platforms. It seems the PM Office wanted to acknowledge this gesture on part of the tobacco industry and publicise it to convince other big businesses to follow the suit. But what followed was totally opposite.
Soon after the meeting, criticism started pouring in from different quarters including health sector professionals, civil society organisations, anti-tobacco campaigners, parliamentarians and political parties in the opposition and even the international community.
The point of their concern was that the prime minister had accepted a donation from the cigarette manufacturing industry, something which has been prohibited under the anti-tobacco laws of the country as well as the provisions of the World Health Organisation’s (WHO’s) Framework Convention on Tobacco Control (FCTC). This industry is not allowed to promote its image under the garb of Corporate Social Responsibility (CSR) initiatives or philanthropy.
The government of Pakistan signed the FCTC in May 2004 and ratified it the same year. The convention gives comprehensive guidelines to Parties (States) on how to make their tobacco control measures effective and also advises on which restrictive measures to take. However, its Article 5.3 is relevant here that states: “In setting and implementing their public health policies with respect to tobacco control, Parties shall act to protect these policies from commercial and other vested interests of the tobacco industry in accordance with national law.”
Fortunately, this outburst and criticism did not go unnoticed as is obvious from the statement issued by Dr Zafar Mirza, Special Assistant to the Prime Minister on National Health Services (NHS). He suggested the ministry should brief the premier on this contentious issue and ensure that he does not accept similar funds from the tobacco industry in the future. This was definitely short of the expectations of the critics who wanted the donation money to be returned to BAT in order to send a strong message to an industry playing with lives of people.
The question here is that what exactly the tobacco industry wants to achieve if these allegations are to be believed. An answer comes from Malik Imran, Country Representative of Tobacco Free Kids (TFK) – an international organisation working on tobacco control. He tells TNS this is just one example of how the tobacco industry is manoeuvering and lobbying to get favours from the federal government, especially tax relief, just before the annual budget announcement.
“Under the provisions of FCTC, Pakistan as a signatory needs to increase taxes on tobacco products on a regular basis to make these expensive and out of reach of people. This will increase revenues and help reduce the incidence of smoking. But on the contrary, the tobacco companies especially the big ones have got this tax reduced drastically on strange grounds.”
Imran shares the tobacco companies claim high prices of their cigarettes due to high taxation make users opt for smuggled, non-duty paid and counterfeit cigarettes. They argue that this way the government is deprived of huge revenues that it would have earned in the absence of illicit trade, so it is advisable to keep taxes low on tobacco products.
The situation on ground is that the tobacco industry is reaping benefits of a three-tier tax regime apparently tailor-made to suit its objective. Earlier, there used to be two tiers but third-tier set a benchmark under which low-priced cigarettes would be taxed at a very low rate. The big cigarette companies have mostly stopped producing expensive brands and shifted their production to cheaper brands to avail this tax benefit. They have flooded the market with low-cost products and are looking for more tax favours or at least extension of what they are already getting.
Anyhow the claim of illicit trade by the tobacco industry is being challenged at different levels and a common perception that has emerged is that these figures are highly exaggerated. A recent study titled: “The burden of illicit trade in cigarettes in Islamabad,” carried out by Fikr-e-Farda Organisation, points out that only 15.95 percent of cigarettes consumed in the city can be classified as illicit. This is far below the claim of 40 percent made by the tobacco industry.
Interestingly, the Parliamentary Secretary, Ministry of National Health Services (NHS) Dr Nausheen Hamid has endorsed the findings of the study. She has expressed that the exaggerated figures of the illicit trade in cigarettes were accepted by the previous government which introduced the policy of reduced taxes on tobacco products. In a statement, she said similar studies will be carried out in different cities of the city to gather data that can be used to counter the argument of the tobacco industry.
Sajjad Ahmed Cheema, Executive Director, The Society for the Protection of the Rights of the Child (SPARC), shares their main concern is that low prices of cigarettes are attracting children to this addiction. Latest surveys have shown that 1200 children are adding to the existing pool of smokers every day because they can afford to buy cheap cigarettes from their pocket money. “Taking up smoking is the first step and such children may soon start adding harmful additives to the cigarettes they smoke.”
Cheema points out that all over the world countries are constantly imposing new taxes on cigarettes, and sometimes twice a year. In United Kingdom, the price of a cigarette pack has reached £15 but in Pakistan it is available for as low as Rs40 which is alarming. He says last year the PTI government decided to impose a new tax, to be known as sin tax, on cigarettes but it has not been able to implement it. “The plan was that this tax could be spent on providing health facilities to the masses. If this tax is imposed there will be no need to privatise public sector hospitals.”
Muhammad Javed, Project Manager, Tobacco Control Cell, Ministry of National Health Services (NHS), tells TNS the Health Ministry is convinced that the tobacco industry’s argument about illicit trade is unfounded and it is the Federal Board of Revenue (FBR) that is buying it. “We have taken up this matter and trying our best get taxes enhanced.”
Citing figures from a report of the State Bank of Pakistan (SBP), he says the revenue coming from tobacco industry has increased by only 5 per cent in one year whereas the profits have increased by 100 per cent. “This means the markets are flooded by cigarettes and the proceeds are going mainly into the pockets of cigarette manufacturing companies.”
The revenue coming from tobacco industry was Rs83 billion in 2016-17 and Rs87.5 billion in 2017-18. This figure was Rs114 billion in 2015-16 when the third tier was not announced and the industry had not been given the tax relief it is enjoying at the moment. Another alarming finding, he says, is that in 2016-17, 34 billion cigarette sticks were produced – a number which has increased by 72 per cent to 59 billion in a year. These figures best shows what the cigarette industry is doing to us, he concludes.