Islamabad - The Federal Board of Revenue (FBR) will be launching electronic monitoring system in early months of next year for monitoring production of cigarettes.
A meeting of the technical working group on tobacco taxation was held under the chairmanship of Dr Amir Sheikh, joint secretary (admin), ministry of national health services, regulations & coordination.
Muhammad Zaheer Qureshi, secretary FBR, told the participants that FBR will be launching electronic monitoring system in early months of next year for monitoring production of cigarettes. He said that by implementing two-tier system, there would be maximum increase in tobacco tax revenues up to Rs 12.5 billion annually.
He said that FBR was dealing with issue of smuggling through maximum enforcement and raids. The secretary proposed to include other relevant enforcement agencies in the working group. He also proposed to convene next meeting of the working group in early December 2014.
Muhammad Waqas Tarar, Director Tobacco Control Cell, Mo NHSRC, added that by raising tax the youth could be prevented from starting smoking. He quoted references from recent report published from Bloomberg Initiative to reduce tobacco use “The Economics of Tobacco and Tobacco Taxation in Pakistan.”
The director tobacco control cell stressed that this working group should recommend high uniform specific cigarette excise tax with annual adjustments to tobacco tax rates. He also stressed on the need to impose tax on other tobacco products. He also expressed the importance of earmarking tobacco taxes for health purposes and tobacco control.
He giving a detailed presentation on the subject said that Pakistan signed and ratified Framework Convention on Tobacco Control (FCTC) in 2004.
“By raising tobacco taxes, tobacco consumption and premature deaths would be reduced. It would also benefit tax collection through enhancement of tobacco taxation in Pakistan,” he stated.
Dr Amir Sheikh emphasised on important assignment of working group to review the existing tobacco tax structure in Pakistan and develop an action plan to increase taxes on tobacco products in line with FCTC recommendations.
Badr-ud-din Ahmad Quraishi, chief of FBR, gave comprehensive presentation on current tobacco tax structure in Pakistan. He thoroughly explained different acts and rules applicable to cigarette industries. He also explained FED structure and elucidated why there was two tiers system on tobacco taxation in Pakistan. He said that single tier would cause disparity between prices of legal cigarette and illicit cigarettes and would thus encourage illicit trade. He also explained the tax structure on imported cigarettes.
Dr Inamul Haq, senior health specialist, World Bank, stressed that this working group should make clear TORs. He proposed to work on reforming tobacco taxation system, taking demand reduction measures and curbing smuggling of tobacco products.