Islamabad: Appreciating the Federal Ombudsman’s investigation to ascertain out if any maladministration has been done in implementing tobacco control measures by federal government departments, TheNetwork for Consumer Protection expects that the Ombudsman’s decision will help strengthen the bureaucratic set up to resist the tobacco industry’s influence and set a stage for robust enforcement of tobacco control law and reversal of the recently introduced third tier in tobacco taxation.
TheNetwork is assisting the Federal Ombudsman in a complaint of the Pakistan National Heart Association (PANAH), which has renowned cardiologists, pulmonologists, and medical professors who have expressed extreme concern over tobacco use alleged maladministration on part of the Federal Board of Revenue, Ministry of Finance and Ministry of National Health Services, who have violated the obligatory regulations of the Framework Convention on Tobacco Control (FCTC) during 2017-18 by decreasing tax and introducing 3rd tier on cigarettes.
The Ombudsman initiated investigations under Presidential Order No. 1 of 1983 clause 2.1 that defines mal-administration as a decision, process, recommendation, act of omission or commission by a department which is contrary to law, rules or regulations or is a departure from established practice or procedure. It also covers the decision which involves the exercise of powers or the failure or refusal to do so, for corrupt or improper motives, such as, bribery, jobbery, favouritism, nepotism and administrative excesses….”
In his submissions, Nadeem Iqbal, CEO of TheNetwork said that the recent decision of the FBR to lower tobacco tax is based on statistics provided by the tobacco industry while FBR has totally ignored the recommendation for a higher taxation ration of a group established by the Health Ministry; this group also includes FBR and the World Bank.
Nadeem challenged the contention of the tobacco industry presented to FBR that its cigarette production has declined by 40%, which is captured by counterfeit duty non-paid cigarettes. Nadeem said that rather than playing in the hands of international tobacco companies by lowering the prices of their brands to make them competitive with counterfeit cigarettes, FBR should have brought in duty non-paid cigarettes into the tax net.
Then by levying 75% tax on tobacco, FBR would not only have expanded the tax net and increased revenues, but would have also lowered tobacco consumption, says Nadeem. In the present scenario, not only will cigarette consumption increase manifold because of lower prices but FBR will not even collect the same amount of taxes that it collected in 2016.
Nadeem further added that the FBR considered arguments of Pakistan Tobacco Company and Phillip Morris International while preparing the budget proposal for 2017-18 and utterly overlooked the Ministry of Health’s recommendations for increase in tobacco taxation. It may be mentioned that in the pre-budget recommendation, the Ministry of National Health had asked for an increase in the Federal Excise Duty on lower slab of all brands of cigarettes from the Rs32.98 to Rs44 per pack of 20 cigarettes. But ignoring the recommendation, the Ministry of Finance has reduced FED on a pack of 20 cigarettes from Rs32.98 to Rs16 by introducing third tier. There is almost no change in the FED on upper slab.
Presently, the tobacco industry has launched a campaign inside shops alluring consumers to buy low-priced cigarettes. This will increase tobacco consumption in Pakistan. The primary purpose of levying FED is to reduce consumption of cigarettes rather than earn revenue.
TheNetwork believes that such retrogressive measures by FBR under pressure from the tobacco industry will endanger the lives of the people and will also damage Pakistan’s efforts to meet Sustainable Development Goals targets, especially SDGs goal 3a, “Strengthen the implementation of FCTC in all countries.” Pakistan is signatory to the FCTC, which calls in its article 6 for “Price and Tax Measures to Reduce the Demand for Tobacco” by raising FED to at least 75%.
