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ISLAMABAD: In a new development, the Ministry of Law and Justice has ruled that the Federal Board of Revenue (FBR) is legally allowed to impose the federal health levy on tobacco products through an ordinary bill or through an ordinance before the upcoming budget (2021-22).

In response to a letter of the FBR, the Law Ministry has observed that the proposed federal health levy would fall within the definition of fiscal laws for the purpose of the Federal Board of Revenue Act.

“In the light of the restriction in the use of funds collected pursuant to the propose law, it will not constitute a money bill,” the Law Ministry’s ruling said.

The imposition of the federal health levy on the manufacturing and sale of harmful products falls within the domain of the parliament under the constitution, therefore, the imposition of the said levy on such sale and manufacturing would be applicable throughout Pakistan, the Law Ministry said. The federal cabinet approved the federal health levy on tobacco products in 2019, but it is yet to be implemented. The levy proposes a Rs10 per cigarette tax to discourage smoking among youth, and help the government raise its revenue from the tobacco products. Smoking has been resulting in 166,000 individuals’ deaths in Pakistan each year, while the tobacco-related diseases were causing an annual loss of Rs615 billion to the national exchequer. Anti-tobacco activists have welcomed the Law Ministry’s decision and urged the FBR to enforce the levy across the country before the upcoming budget.

Country Head of Campaign for Tobacco Free Kids Malik Imran said the FBR should implement the health levy to discourage smoking and bring down the overall health cost in the country before the upcoming budget. He said the FBR should not wait for the budget and start collecting the extra revenue through the health levy by enforcing it forthwith.

Imran said that the implementation of the health levy and increase in tobacco taxes should be treated as two separate things by the FBR and the government.

The health levy should be enforced before the passage of the budget, while the taxes on cigarettes should be separately enhanced in the budget to make the tobacco products costly and make them out of the reach of the children and the youth, he suggested.

Earlier, the Ministry of National Health Services and Regulations has also written a letter to the Ministry of Finance for imposition of the federal health levy in the country to raise the government revenue and discourage smoking.

Copyright Business Recorder, 2021

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