Govt urged to increase FED on tobacco products

Islamabad:Tobacco control activists demand that the government shall increase FED on tobacco products, including smokeless tobacco products, in Pakistan. Currently, there are two tax slabs for cigarettes. An amount of Rs33 FED is imposed on cigarettes costing less than Rs90 per packet and Rs90 on cigarettes with a price of Rs90 and above. However, these taxes are still below the standard set by World Health Organisation’s (WHO) Framework Convention on Tobacco Control (FCTC) to which Pakistan is a signatory since 2005. FCTC requires signatories to optimally impose a 75% tax on the retail price of cigarette packs. Pakistan has yet to achieve this standard. They demanded at least 30% increase in the Federal Excise Duty (FED) for each slab of cigarettes to enhance revenue collection and lower the consumption of tobacco, especially among youth.

Mr. Waseem, Social Policy and Development Center (SPDC) said that the excise tax in Pakistan is still below 90 billion. FBR has achieved it in 2015-2016. Since June 2019, there is no change in the excise duty rate on cigarettes but prices of cigarettes have increased. In 2019, the main source of increase in cigarette prices was not the excise duty; it was due to increase in the price net of taxes. The over shifting of taxes in prices serve a dual purpose. It increases the industry’s profit per pack and industry uses this price increase to avoid any tax increase in the tax rate for the year 2020. The revenue loss to the government due to under reporting in 2017 and 2018 was Rs35 billion and 15 billion respectively. Based on the above finding, we would recommend an increase in the excise duty rate for the year 2021-2022.

Abid Sulehri, executive director Sustainable Policy Development Institute (SDPI) said that still the government is facing a financial crunch due to the Covid 19 pandemic. He added that the total economic cost of smoking in Pakistan was estimated at Rs143 billion in 2012. This includes direct healthcare costs and costs due to lost productivity, according to a 2018 report entitled Global Economic of Smoking-Attributable Diseases. He further added that in order to adjust the inflation rates in the upcoming budget, the government needs to increase the current FED on tobacco products to at least 30%. By doing so, revenues for the government will increase which can be channelized into health and education program initiatives of the government.

Senator Ayesha Raza Farooq stated that tobacco use is the world’s leading cause of preventable death, according to the World Health Organisation. Increasingly, the burden of tobacco use is greatest in low- and middle-income countries that have been targeted by the tobacco industry with its deadly products and deceptive marketing practices. She stated that increasing taxes on tobacco products is a proven effective measure to control and reduce the consumption of tobacco products. She also showed her support for increasing taxes on tobacco products, including FED and health levy, with periodical adjustments of inflation rates in order to make it less accessible to the youth.

Tobacco control activists requests the Honorable Prime Minister of Pakistan, Imran Khan to take up the issue of tobacco use in Pakistan and increase taxes, including FED and health levy, on tobacco products to save our youth from this menace.