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No two opinions about tax revenue being earmarked for health sector: Dr. Zafar


July 7, 2019

Islamabad : The revenue collected through enhanced Federal Excise Duty (FED) in the Finance Act 2019 will be earmarked to the health sector. This is an unprecedented and historic development about which there should be no doubts or ambiguities.

The Special Assistant to Prime Minister on Health Dr. Zafar Mirza, in a statement issued here Saturday, said the development is a big win for health of the people of Pakistan.

Dr. Mirza recounted the several rounds of discussions that took place with Adviser on Finance Dr. Hafeez Sheikh, now Federal Minister for Revenue Hammad Azhar, Minister of Law Farough Naseem, and Chairman FBR Shabbar Zaidi. “Under the instructions of Prime Minister Imran Khan, the team worked to find out the most viable solution. Finally, it was agreed that the enhancement of FED on cigarettes, fizzy drinks and sugary drinks would be considered as a health levy and the revenue generated will be earmarked for health sector. Eventually, Hammad Azhar clearly stated in his budget speech that the additional revenue thus collected would be earmarked to the health sector,” Dr. Zafar said, adding “the budget proposals comprised both the budget document and budget speech made by the Finance Minister on the floor of the National Assembly.”

Dr. Zafar said that the Pakistan Tehreek-i-Insaf had, in its election manifesto, pledged that the health budget would be doubled by 2020. “With the enhanced revenue in the Finance Act 2019 being earmarked to health, there will be even greater increase in health budget,” he pointed out. He said the measure would have far-reaching impact and is a win-win situation with respect to health as it will lead to reduction in consumption of tobacco, fizzy and sugary drinks, and enhancement of revenue from additional taxes. In the Finance Act 2019, the minimum FED has been increased from Rs. 25 to Rs. 33 on lower tier of cigarette packs of 20, and from Rs. 90 to Rs. 104 on upper tier. The additional tax revenue will be earmarked for the health sector, over and above the already allocated resources. Dr. Zafar also welcomed the abolishment of third tier of cigarettes for taxation purposes which had resulted in lowering of revenues on tobacco.

Tobacco kills 160,189 persons in Pakistan every year. Almost 15.6 million adults are currently smokers while around 1200 Pakistani children between ages of 6 and 15 initiate smoking every day. Moreover, the economic cost of smoking amounts to Rs. 143.208 billion. This includes direct costs related to healthcare expenditures and indirect costs related to lost productivity due to early mortality and morbidity; the consumption of fizzy and sugary drinks are contributing to rise in Non-Communicable Diseases.

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