UNDERSTANDING THE IMPLICATIONS OF TAXATION POLICY IN PAKISTAN: A CASE OF FAILED MULTI-STAKEHOLDER INITIATIVES

Abstract

Pakistan has multifaceted taxation difficulties in tobacco control and administration. Tobacco taxation issues include industry pressures, blaming the unauthorized market, and revenue theft at the collecting point. To avoid tax evasion and produce taxes on a consistent basis, a simple taxation system is required and suggested by related stakeholders for the execution of policies. A huge amount of tax is collected from this sector by the revenue collection agencies adding big portion in national deposits. On the other hand, tobacco usage is responsible for greatly raising the economic burden, greater health expenditures, and indirect costs associated with premature death, disability owing to tobacco-related illnesses, and loss of productivity. Effective tobacco taxes minimize various externalities by reducing consumption, legal consumption patterns and prevalence, as well as contributing to a reduction in government spending on health care expenditures directly due to cigarette smoking diseases. The philosophy of tax administration and control is creating policy conflict between different public institutions in Pakistan. The revenue collecting institutions believe on lowering the tax rates to overcome the illicit tobacco manufacturing and sales while health institutes believes on coercive measures and high tax rates to avoid and control the tax consumption. This paper will discuss the policy conflict, control mechanism, institutes tax philosophy, tax mechanism, and best practices around the globe to avoid policy conflict and better governance.