FAISALABAD: In separate letters to Finance Minister and Special Assistant to Prime Minister on Revenue, Saira Afzal Tarar, Minister for National Health Services, has suggested to increase the Federal Excise Duty (FED) on lower slab of all the brands of cigarettes by Rs44 per pack of 20 cigarettes in the 2017-18 Budget. She has also requested to earmark 2% of Tobacco Tax revenue for the Prime Minister National Health Programme for the treatment of Non-Communicable Diseases (NCDs) and tobacco control.
Pakistan signed the Framework Convention on Tobacco Control (FCTC) in 2004. Under Article 6 of the FCTC, Pakistan has to implement tax and price policies on tobacco products as a way to reduce tobacco consumption. Tobacco taxes that translate into price increases are considered the single most effective option for reducing tobacco use and increasing revenues. Higher tobacco taxes save money by reducing tobacco related healthcare costs.
In order to finalize the recommendations to increase taxes on tobacco products in line with the FCTC recommendations, a technical working group on tobacco taxation was formed by the ministry. Experts from the Federal Board of Revenue (FBR), Bloomberg Partners, WHO, World Bank and Tobacco Control Cell were members of the group. The group has finalized recommendations for increasing taxes on tobacco products in the federal budget 2017-18. It is recommended that the lower slab of all brands of cigarettes may be taxed at the rate of Rs44 per pack of 20 cigarettes.
The cigarette packets are categorized in lower and upper slabs. Packets of 20 cigarettes which have a retail price of up to Rs.88 are ranked in the lower slab and those with the retail price of over Rs.88 are included in the upper slab. Currently, the tax rate for the lower slab is Rs32.98 and for the upper slab it is Rs74.10 per packet.
Moreover, the study also showed that if tax is increased to Rs44 per pack, the revenue will go up by Rs39.5billion avoiding 0.65 million premature deaths caused by smoking among current smokers.
The group has also recommended to remove all the exemptions of tobacco taxes provided to Navy, President of Pakistan, the President of Azad Jammu & Kashmir and the governors of the provinces, members of their families and guests under S. No. 4 of the Schedule 3 of the Federal Excise Act. In order to monitor production of cigarettes, it is recommended to implement the Electronic Monitoring System (tacking & tracing system) on priority basis.
In Pakistan, tobacco is a cause of death of around 108,800 persons every year. This is 298 deaths per day.
