Finance ministry asked to review tobacco taxation structure

2018-09-06T01:48:46+05:00 OUR STAFF REPORT

ISLAMABAD - Ministry of National Health Services (NHS) has once again asked the finance ministry to withdraw the 3rd slab of Federal Excise Duty (FED) on cigarettes introduced in previous budget as the decision resulted in increase in cigarettes production and consumption, said an official on Wednesday.

The statement issued said that Federal Minister (NHS) Aamer Mehmood Kiani has recommended to the Ministry of Finance to withdraw 3rd slab of FED on cigarettes introduced in federal budget 2017-18.

In a letter written to Federal Minister for Finance, Revenue and Economic Affairs Asad Umer, the health minister informed that after introduction of 3rd slab in 2017, the local production of cigarettes increased by 77pc compared to production in previous year.

It is recalled that, in last week, health minister had announced to coordinate with Ministry of Finance to raise taxes on tobacco products.

The letter states that as a signatory to Framework Convention on Tobacco Control (FCTC), Pakistan has to implement tax and price policies on tobacco products as a way to reduce tobacco consumption. Moreover, Pakistan is obligated to achieve the targets set in Sustainable Development Goals (SDGs).

Prior to federal budget 2017-18, Ministry of NHSRC proposed to tax the lower slab/tier of all brands of cigarettes at Rs44 per pack of 20 cigarettes. The proposal was based on a study, according to which, a uniform specific excise tax that accounts for Rs44 per pack of 20 cigarettes could reduce number of smokers by 13.2pc, increase tax revenues by Rs.39.5 billion, leading to reduction of 0.65 million premature deaths caused by smoking among current smokers, while also preventing 2.55 million youth from taking up smoking. In Finance Act, 2017 a new slab/tier with reduction in FED (i.e. Rs.16) was created in Finance Act, 2017, which resulted in decrease in prices of the most sold brands. Prior to federal budget 2017-18, Ministry of NHSRC requested the FBR to withdraw 3rd slab/tier because it resulted in increasing production of cigarettes. In addition, it was proposed to impose a levy with the name of “Health Levy on Cigarettes”, but it could not become part of Finance Act, 2018.  The minister earlier this week had said that coordination would be made with the ministry of finance to raise taxes on cigarettes because tobacco use is a major cause of deaths in the country.

Almost 24 million adults currently use tobacco in various forms in Pakistan. Tobacco Control Cell (TCC) had taken measures to reduce the prevalence of tobacco use in the country, in accordance with its mandate.

A senior official informed The Nation that the tobacco production companies have strong influence in the FBR and Finance department due to which the decision taken of introducing 3rd slab was not undone.

“Health ministry has the pressure of implementing the international agreements for the reduction of tobacco consumption in the country,” said official.

The official also said that health ministry once again has asked the finance ministry officially to eliminate the 3rd slab of cigarettes due to which the companies are making huge profit. “Once again ball is in the FBR’s court to decide on the issue,” he said.

Spokesperson NHS Sajid Shah talking to The Nation said that the decision to intimate the finance division has been taken knowing the seriousness of the issue.

“People’s health is worth more than the profit in business,” he said.

In June, World Health Organization (WHO) Framework Convention on Tobacco Control (FCTC) met at UN to eliminate the illicit tobacco trade from the world.


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