RESUMO
BACKGROUND: The lack of reliable tobacco healthcare and economic cost estimates leaves the tobacco industry undertaxed and thriving in Pakistan and makes the country as one of the top tobacco-consuming nations. To facilitate effective tobacco tax policymaking, this study estimates the economic cost of smoking-attributable diseases and deaths in Pakistan. METHODS: A nationally representative sample survey of 13 000 households was administered to gather the data required to estimate different cost components of smoking-attributable diseases through the prevalence-based approach. FINDINGS: The total smoking-attributable economic cost of all diseases and deaths in Pakistan in the year 2018-2019 for persons aged 35 years or older is 615.07 billion ($3.85 billion). Similarly, three major diseases, namely cancer, cardiovascular disease and respiratory disease, along with associated deaths, cost the nation PKR437.8 billion ($2.7 billion) of which 77% is the indirect cost. The three major diseases make 71% of the total estimated cost, nearly two-thirds of which is borne by rural residents, nine-tenth by males and more than four-fifths by the citizens in the 35-64 years age group. CONCLUSION: The total annual economic costs of all smoking-attributable diseases and deaths and those of the three major diseases equal 1.6% and 1.15% of Pakistan's gross domestic product, respectively. The tax contribution of tobacco sector is merely 20% of the total estimated cost. The finding of huge economic and health costs of smoking makes a convincing case for policymakers to realise the true value of the industry's contribution and raise tobacco taxes to the level of full cost recovery.
RESUMO
BACKGROUND: While there is a large literature on the magnitude of price elasticity of cigarette demand, less is known about the same for chewed tobacco. Moreover, the studies on cigarette demand in Pakistan tend to ignore the heterogeneity in the smoking behaviour. This study estimates price elasticity for cigarette and chewed tobacco demand across different income groups, provinces and regions; and use these coefficients for simulating Pakistan's tax policy and its impact on revenue and health outcomes. METHOD: Deaton model was applied on the 2015-2016 Household Integrated Income and Consumption Survey dataset to estimate price elasticities of different tobacco products. RESULTS: The demand for cigarettes is unitary elastic (-1.06), suggesting that a 1% increase in cigarette price would reduce its consumption by 1.06%. On the other hand, the demand for chewed tobacco is relatively inelastic (-0.55). Provincially, the own-price elasticity of cigarettes is negative and significant for all but Kyber Pakhtunkhwa (KP) province; whereas that of the chewed tobacco is negative and significant only for KP and Balochistan. Besides, the price elasticity of demand for both tobacco products is negative and significant only for lower income group and the rural region. The tax simulations favour a two-tiered tax system over the existing three-tiered system as the former will bring significantly better tax revenue and health outcomes. CONCLUSIONS: While confirming the effectiveness of tax policies in curbing tobacco use, this study concludes that higher tobacco taxes could increase tax revenue and improve public health in Pakistan.