Tax on tobacco

The introduction of third-tier federal excise duty (FED) on cigarettes – which will result in a 50 percent reduction in tax on tobacco products – is likely to increase their consumption in the country. According to a report, Pakistanis smoke over 65 billion cigarettes in a year. As per this report, over 100, 000 deaths in the country can be attributed to diseases caused by smoking.

Pakistan is a signatory to the WHO’s Framework Convention on Tobacco Control (FCTC). This convention calls for “price and tax measures to reduce the demand for tobacco”. The minimum FED suggested under the convention is 75 percent. A report released by a non-profit organisation suggests that the cumulative FED on tobacco products till FY 2016-17 was around 57 percent. The government’s argument for reducing taxes has been that it is losing millions of rupees in revenue due to the widespread availability of smuggled cigarettes at lower prices. By reducing taxes, the government has paved the way for an even higher incidence of smoking-related deaths.

Syed Anwer Alam

Karachi