Rs10 Health Levy proposed on cigarette packets

ISLAMABAD: The Federal Board of Revenue (FBR) has proposed Rs10 Health Levy on a packet of cigarettes to the Ministry of Law.

“Yes, we have forwarded a proposed Health Levy to the Ministry of Law for seeking legal advice if it falls into the jurisdiction of the federal government or not in the aftermath of the 18th Amendment,” top FBR officials confirmed to The News here on Monday. They said things required further clarity before devising policy formulation.

The FBR officials said they were awaiting the response of the Ministry of Law and after receiving the advice, they would move forward accordingly. The anti-tobacco lobby has been advocating imposition of the Health Levy as the price increase would discourage consumption, especially among children and youths. They wondered where the health levy has disappeared despite granting of approval by the federal cabinet during the last fiscal year.

The FBR official cited an example of the Workers Welfare Fund (WWF) and said it was operated and run by the FBR. There were two views as some quarters argued that health was a provincial subject, so the Centre could not impose the levy. There is another view that the imposition of levy is the domain of the Centre, so it could move ahead without any jurisdictional issues.

On the other hand, the giant formal tobacco sector companies, including Pakistan Tobacco Company (PTC) and Philip Morris, are sternly opposing this move, arguing that the consumption would not reduce but it would result in shifting of consumers from the formal sector to illicit cigarettes.

This move, they estimated, could cause revenue loss to the national exchequer to the tune of Rs20 to Rs24 billion per annum. Together with increased share of illicit product, the estimated losses to the national exchequer could go up to Rs100 billion, they added.

The FBR officials were of the view that the legal points forwarded to the Ministry of Law were never considered before, so it was essential to seek advice of the concerned ministry before making the strategy to move ahead.

The FBR officials also said that the decision about taxation on the tobacco sector was usually taken on the eve of the budget, so the FBR will get sufficient time for policy formulation on this subject in the coming months.

Meanwhile, in a separate development, the Ministry of National Health has proposed to increase pictorial health warning on cigarette packets by 10 percent, bringing up from 60 to 70 percent for seeking approval of the federal cabinet. Earlier, the size of warning was increased from 50 to 60 percent.