Experts underscore need for 26pc increase in FED on tobacco items

ISLAMABAD: To meet ambitious target of Federal Excise Duty (FED) at Rs 711 billion for next fiscal year, experts and anti-tobacco activists have recommended 26 percent increase in the FED on tobacco products.

Against the FED target of Rs 600 billion set for 2023-24, the projection of the FED for the next fiscal year has been set at Rs 711 billion, showing an increase of Rs 111 billion. Cigarettes is a major revenue spinner of the FED and requires immediate raise of at least 26 percent in the FED rate to continue its share in overall indirect taxes collection, experts added.

The Society for the Protection of Rights of the Child (SPARC), in a statement, has warmly welcomed the appointment of Muhammad Aurangzeb as the country’s new Finance Minister and urged him to consider tobacco taxation as a potential avenue for bolstering the economy.

Such a measure could potentially offer a dual benefit of mitigating economic woes while simultaneously advancing the nation’s health agenda, the SPARC said in a statement.

The SPARC shared the concerns of health activists who advocate for higher taxes on cigarettes rather than utilities. This strategic approach not only aligns with public health goals but also addresses the broader economic implications associated with tobacco use, it added.

Malik Imran Ahmad, Country Head for Campaign for Tobacco-Free Kids (CTFK), appealed to Finance Minister Muhammad Aurangzeb to recognise the significant challenge posed by tobacco consumption in Pakistan.

He said with approximately 31.9 million adults consuming tobacco, accounting for 19.7% of the adult population, the impact on public health and the economy cannot be overstated.

Ahmad emphasized the burden placed on healthcare resources to treat smoking-induced non-communicable diseases, underscoring the urgent need for measures such as increased tobacco taxation to mitigate the economic strain and protect public health.

Separately, Rabia Syed, Director IBC, said, “Pakistan can generate additional Rs 17 billion revenue though a 26 percent increase in taxes on cigarette.”

“This proposal not only aims to address immediate fiscal pressures but also aligns with broader public health objectives by discouraging tobacco consumption as outlined by the WHO,” she added.

Dr Khalil Ahmad, Programme Manager at SPARC, highlighted the affordability of cigarettes as a driving factor behind youth initiation into smoking, further emphasizing the economic costs associated with smoking-related illnesses and deaths.

Copyright Business Recorder, 2024