RAHUL BASHARAT - ISLAMABAD

Peshawar High Court (PHC) has suspended the third slab of cigarette brands introduced by Federal Board of Revenue (FBR) to control the illicit trade of cigarettes in the market.

The court provided the interim relief to the petitioner. The petitioner pleaded before the court that Pakistan is the only country identified by the researchers where tax on the high sellable brands has been reduced by 33 percent against the World health Organization (WHO) Framework Convention on Tobacco Control.

The petitioner said the recent changes brought in the Federal Excise Act 2005 and implemented in the Finance Act 2017 resulted in reduction in prices of brands instead of making them expensive.

In Pakistan, cigarette excise duties have been applied in two tiers before 2017. The first tier was for the cigarette which was expensive. The tax tier was based on the price of the cigarette; the brand with price more than Rs88 was paying Federal Excise Duty (FED) of Rs74 per pack, in second slab the brand less than Rs88 was  paying Rs32.8 FED. In third slab, introduced by the government, the tax was reduced to Rs16 with the retail price below Rs58.5.

The petitioner pleaded in court that government though introduced restriction on lowering the price and shifting of brand to another slab, but the restriction remained implemented on the first tier only.

Advocate Babar Khan Yousafzai, talking to The Nation, said that all multinational and local manufacturers of the cigarettes have been bared to sell the brands in third slab now until the petition is pending.

He said the court has suspended the third slab from the day it was introduced which covers nearly six months. “The national exchequer suffered around Rs30 billion loss due introduction of third slab,” he said. Babar Khan said that government argued that the 3rd slab was introduced to control counterfeit tobacco trade in the market however it only benefited the tobacco industry.

“The tax on cigarette brands was reduced to Rs16 from 34,” he said.

He said the government changed structure of finance act to launch the third slab which was legally not allowed. Earlier, Ministry of National Health Services and Regulations (NHS) had recommended the finance ministry to increase FED on lower slab cigarette brands.

Minister NHS Saira Afzal Tarar had written separate letters to ministry of finance and Special Assistant to Prime Minister on Revenue. The letters suggested implementing tax and pricing policies on tobacco products referring to the Framework Convention on Tobacco Control (FCTC).

According to the letter, increase of Rs44 per pack on 20 lower slab brands was suggested for the budget 2017-18.

Spokesperson NHS Sajid Hussain Shah said that ministry had proposed taxation on cigarettes for the better health of people and discourage the tobacco consumption. He said that as the matter is sub-judice nothing could be commented.