Govt urged to increase FED on cigarettes by 30 percent in budget

PESHAWAR: The government should increase the federal excise duty on cigarettes in the upcoming budget by 30 percent as the tobacco taxes in Pakistan are around 25 percent lower than the World Health Organisation (WHO) recommendation.

This was stated by Tobacco Free Kids, an organization working for youngsters’ healthcare, in a letter to the Ministry of National Health Services and Regulations on Tuesday.

It said the average excise tax share is 45.4 percent of the retail price in Pakistan which is much lower than the WHO recommendation that excise tax be at least 70 percent of the retail price. It urged the Ministry to raise the tobacco excise to Rs43 on the low price tier and Rs135 on the premium tier.

The 2-page written proposal to the ministry said the suggested tobacco excise would result in 219,000 fewer smokers; 3.8 percent reduction in smoking prevalence among adults; and 6.4 percent reduction in smoking intensity among adults.

The Health Ministry would forward the proposal to the Federal Board of revenue (FBR) for consideration in the federal budget (2021-22). It said the proposed tax scheme would also help save at least 76,800 lives and Rs19 billion in additional total tax revenue-an increase of at least 14.4 percent from the existing tax collection.

The document also said that tobacco taxes in Pakistan were low and cigarettes were cheap. The average excise tax share is 45.4 percent of the retail price, much lower than the WHO recommendation that excise tax be at least 70 percent of the retail price, the document said.

It said the cigarette prices in Pakistan are among the lowest in the world, and the effective excise tax rate on cigarettes in 2020-21 is still the same as it was in 2016-17. The cigarettes in Pakistan became more affordable in 2020-21 from a combination of no change in the federal excise tax and increases in nominal income and inflation.

Pakistan is ranked among the worst-performing countries in the Tobacconomics Cigarette Tax Scorecard with a score of less than one on a five-point scale.

The document said that 30 million adults (age 15 +) currently use tobacco in Pakistan that was a leading cause of deaths due to non-communicable diseases (NCDs), including cancers, chronic respiratory diseases, and cardiovascular diseases.