IMF’s proposal of uniformed tax on tobacco products welcomed

Islamabad:The reports that International Monetary Fund (IMF) has asked Pakistan to impose uniform excise rates on both local and foreign cigarette manufacturers has been highly appreciated by Islamabad-based think tank, Capital Calling.

Hailing former health minister Dr Nadeem Jan, it also called for a 50 per cent increase in taxes on cigarettes to make them harder to access for the masses. The think tank said that statement of the mister has rubbished the propaganda that rise in taxes will lead to smuggling of cigarettes, resulting in a loss to the national exchequer.

Quoting the estimates, it stated that cigarette prices were the cheapest in Pakistan compared to other regional countries. The IMF recommendations relating reports mentioned that it has suggested applying a consistent excise rate in one slab to all domestically produced cigarettes, regardless of the manufacturer’s origin.

It means local and multinational manufacturers will face no discrimination in taxes. Currently cigarettes are taxed in two tiers, which is resulting low collection of taxation from the cigarette industry.

Furthermore, the IMF has also proposed subjecting e-cigarettes to taxation similar to traditional tobacco products, citing comparable health impacts.This recommendation was strictly in line with the guidelines set by the World Health Organization (WHO), said Dr Hassan Shehzad, from International Islamic University. He said due to the two-tier system, multinational companies manage to place their cigarettes in lower tier which results into reduction in cigarette prices.