ISLAMABAD: Health experts and anti-tobacco activists Wednesday rejected a proposal submitted by cigarette manufacturing companies to Federal Board of Revenue (FBR), suggesting a reduction in taxes from Rs1650 per 1000 cigarettes to Rs1250 per 1,000 cigarettes in tier-II Federal Excise Duty slab.
The FBR is in the process of finalisation of the revised FED slabs on cigarettes for tier-I and tier-II through Finance Bill (2020-21).
The health experts said the proposed tier-II structure of the FED would lead to consumption of the cigarettes, increase health burden on the national kitty besides contributing to a reduction in the national revenue.
The companies have also suggested the FBR to increase taxes on cigarette brands falling in tier-I of the tax rate from Rs5200 per thousand to 5600 per thousand, which activists termed a gimmick by the industry to trick the people. The activists argued that the proposed proposal will not only hit the health of the people but also would cause loss in government revenue as 80 percent of companies volume falls in tier-II.
In the past, the government after relying on companies data introduced a third tier which resulted in lost of Rs34 billion in revenue and the government had to revert back to Two-tier structure. The fate of the proposed proposal wouldn't be different from that. In fact the government should adopt best practices and should abolish the tier system on cigarettes and simply increase 20 rupees Federal Excise Duty on cigarettes for each slab of tobacco tax structure in the budget to enhance revenue collection and discourage tobacco use, Azhar Saleem, chief executive officer at Human Development Foundation, said on Wednesday.
He said the revenue would help the government cover Rs143 billion per annum health burden on hospitals due to the increasing tobacco consumption.
Saleem urged the government to initiate tax measures to discourage the tobacco use and increase the tax revenue as per guidelines of the World Health Organisation.
"In Pakistan, tobacco use remains a major public health challenge claiming 160,000 lives annually. Furthermore, 1,200 Pakistani children between the ages of 6 to 15 start smoking daily which is alarming," Special Assistant to Prime Minister on Health Dr Zafar Mirza said in a statement.
Last year, the health ministry had proposed implementing health tax on tobacco products and in 2018 it had asked FBR to increase tax on tobacco products to spend the additional revenue on health sector.
Mirza said the tobacco epidemic killed nearly eight million people globally. "More than seven million of these deaths are from direct tobacco use and around 1.2 million are due to non-smokers being exposed to second-hand smoke. More than 80 percent of these preventable deaths will be among people living in low-and middle-income countries," he said in a statement.
According to health experts, the severe shortage of funds faced by Pakistan to combat the coronavirus could be overcome by imposing more taxation on tobacco products.