Health levy

  • Post by:
  • March 23, 2021
  • Comments off

The disease burden in terms of funds required to provide healthcare services to citizens is huge in Pakistan, whereas the resources available to the government for this purpose are limited. Because of this, people have to approach health service providers in the private sector which takes a heavy toll on their pockets. Those who are unable to afford fees charged by the private sector remain neglected and their health deteriorates further. The public sector does not have the capacity and the resources to fully take care of the health-related needs of the people.

Tobacco use is one of the major causes for the spread of several lethal diseases in the country. A study carried out in 2018 based on somewhat older data pointed out that the cost of treatment on these diseases was around Rs192 billion per year. There is news that a recent study has found that this cost has increased more than three-fold and the results will be shared with the public shortly.

The question that arises here is: what is the liability of the tobacco sector in this regard, and how can it be made to bear the burden of treatment of diseases caused by tobacco use? Globally, there is a general agreement on discouraging tobacco use and taking measures to make it expensive so that it is out of the reach of people, especially the youth. This includes increasing taxes on cigarette taxes gradually, as suggested by the World Health Organisation’s (WHO’s) Framework Convention on Tobacco Control (FCTC) which Pakistan signed and ratified in 2004.

In this context, Pakistan is a high-risk country as 62.7 percent of its population around 207.77 million are youth under the age of 25 years. These young people are more prone to taking up smoking primarily due to its affordability to them than others. The fact that cigarette prices in Pakistan are among the lowest in the world shows that the efforts to increase taxes are not being made as aggressively as these should have been.

A recent development is that an official of the Tobacco Control Cell (TCC) of the Ministry of National Health Services, Regulations and Coordination (MNHSRC) has suggested to the government to impose a health levy on cigarettes and sugary drinks and use the collected amount to buy Covid-19 vaccines and treatment different ailments. In 2019, the TCC had proposed in a bill that a health levy fund can be used for health promotion, universal health coverage etc. Purchasing vaccines was not an idea in 2019 as there was no issue that time.

This suggestion seems very much in place as Pakistan badly needs these vaccines and it can also help discourage unhealthy practices. The imposition of a health levy will make these products expensive besides generating resources for the government and helping it meet its international commitments as well. For example, Goal 3.4 of the Sustainable Development Goals (SDGs) aims at reducing one-third premature mortality from Non-Communicable Diseases (NCDs) by 2030 and Goal 3a talks about strengthening the implementation of the FCTC.

Currently, only the government is doing all the vaccination and still there is no private vaccination; so far, our vaccination efforts solely depend upon donation of vaccines from China. It does not seem possible for the government to vaccinate all that population, with little donations from the world. Purchasing in bulk definitely requires a lot of funds.

In different countries and cities, a flat tax named ‘sin tax’ is imposed on socially harmful goods like tobacco, sugar-added drinks etc. The main purposes of imposing sin taxes are to reduce the consumption of the harmful goods and to increase government revenue. Revenues from sin taxes allow governments to implement different social programmes. Examples here can be of the Philippines which imposed sin tax on cigarettes in 2012 and implemented in 2013; France (Soda Tax) in 2013; Mexico (Sugar Tax) in 2013-14; Thailand (Excise Sugar Tax) in 2016; the UAE (Excise Tax on Sugary Drinks) in 2017; Saudi Arabia (Sugary Drinks Tax) in 2017; and the UK (Sugar tax) in 2018.

In Pakistan also, the proposal of a sin tax was approved in principle in a presentation to the PM by the MNHSRC on September 24, 2018. The PM’s office directed to initiate a summary for the Economic Coordination Committee (ECC) of the cabinet for its consideration on November 9, 2018. This summary was moved for consideration of the ECC on December 7, 2018. The Cabinet Division suggested a ‘Money Bill’, obtaining the views of the FBR and the Ministry of Law and Justice.

Keeping in view the criticism on the media, especially social media, the term was changed from ‘sin tax’ to ‘federal health levy’. Subsequently, the ministry drafted ‘The Federal Health Levy Bill, 2019’ to impose a health levy on: i) cigarette packs at the rate of Rs10 per pack of 20 cigarette sticks: and ii) sugar-sweetened beverages at the rate of one rupee per bottle of 250 milliliters. The estimate of the amount that could be collected this way would be above Rs38.25 billion a year.

According to the Bill, a health levy shall be levied and paid on the manufacture, sale or transfer of cigarettes and sugar-sweetened beverages (harmful products) by the manufacturers, producers, and importers. It was suggested that the revenue collected through the health levy be allocated for the health budget of the federal government.

Years down the road, the situation is that this decision still awaits implementation. Anti-tobacco campaigners claim the government is influenced by the tobacco and sugary drinks lobbies. Recently, the TCC has sent a reminder to the government to go ahead with its proposed plan. The best part of the communication is about using the health levy to buy Covid-19 vaccines for immediate use – which makes sense.

Let us hope the government considers this suggestion seriously and imposes the health levy as early as possible. This way it will be complying with its international obligations as well as taking care of the health needs of its people.

Courtesy :  The News

Categories: News