MOS has suggested to increase FED on lower slab of all brands of cigarettes

May 17, 2017

 Islamabad, 17-05-2017:  In separate letters to Finance Minister and Special Assistant to Prime Minister on Revenue, Mrs. Saira Afzal Tarar, Minister for National Health Services has suggested to increase FED on lower slab of all brands of cigarettes to Rs.44 per pack of 20 cigarettes in 2017-18 budget. She has also requested to earmark 2% of tobacco tax revenues for Prime Ministers National Health Program for treatment of Non-Communicable Diseases (NCDs) / tobacco control.

 
Pakistan signed Framework Convention on Tobacco Control (FCTC) in 2004. Under Article 6 of FCTC, Pakistan has to implement tax and price policies on tobacco products as a way to reduce tobacco consumption. Tobacco taxes that translate into price increases are considered the single most effective option for reducing tobacco use and increasing revenues. Higher tobacco taxes save money by reducing tobacco-related health care costs.
 
In order to finalize recommendations to increase taxes on tobacco products in line with FCTC recommendations, a technical working group on tobacco taxation was formed by the Ministry. Experts from the Federal Board of Revenue (FBR), Bloomberg Partners, WHO, World Bank and Tobacco Control Cell were members of the group. The group has finalized recommendations for increasing taxes on tobacco products in the federal budget 2017-18. It is recommended that the lower slab of all brands of cigarettes may be taxed at the rate of Rs.44 per pack of 20 cigarettes.
 
The cigarette packets are categorized in lower and upper slabs. Packets of 20 cigarettes which have a retail price of up to Rs.88 are ranked in the lower slab and those with the retail price of over Rs.88 are included in the upper slab. Currently, the tax rate for the lower slab is Rs.32.98 and for the upper slab it is Rs.74.10 per packet. 
 
According to a research study on tobacco taxation in Pakistan conducted by the FBR, World Bank, University of Toronto, Johns Hopkins University, University of Illinois at Chicago and other institutes, a uniform specific excise tax that accounted for Rs.44 per pack of 20 cigarettes could reduce the number of smokers by 13.2 percent. Moreover, the study also showed that if the tax is increased to Rs.44 per pack, the revenue will go up by Rs.39.5 billion, avoiding 0.65 million premature deaths caused by smoking among current smokers.
 
The group has also recommended to remove all exemptions of tobacco taxes provided to Navy, President of Pakistan, the President of Azad Jammu & Kashmir and the Governors of the Provinces, members of their families and guests) under S. No. 4 of the Schedule 3 of Federal Excise Act. In order to monitor production of cigarettes, it is recommended to implement Electronic Monitoring System (tacking & tracing system) on priority basis. 
 
In Pakistan, tobacco is a cause of death of around 108,800 persons every year. This is 298 deaths per day. To save lives of people of Pakistan, there is dire need to take immediate tobacco control measures. One of the measures to reduce demand of tobacco products is increasing taxes on tobacco products. This measure will be critical to reducing consumption of tobacco products and save lives of people of Pakistan.