Finance body asked to debate why FED on cigarettes not increased

ISLAMABAD: The Senate chairperson has asked the Standing Committee on Finance to discuss as to why the Federal Excise Duty (FED) on cigarettes was not increased by the tax authorities against the recommendation of the federal cabinet and the Ministry of Health.

Barrister Mohammad Ali Saif had raised the issue in the Senate and said the federal cabinet had proposed the Federal Board of Revenue (FBR) last year and the Ministry of Health on several counts but no action was taken in that regard.

He said that the FED on cigarettes in Pakistan was very low and powerful tobacco companies were the stumbling blocks in that regard.

Saif said the matter "almost amounts to criminal negligence" and be referred to a standing committee where the FBR and Health Ministry officials should be questioned about actions taken by them.

Saif said that the government collected revenue of Rs90 billion from the industry with the FED rate of 17.5 during 2012-2013.

The government collected Rs110 billion, when rate was increased to 33 in 2018-2019.

There are reports that companies are allegedly themselves involved in smuggling of cigarettes that is inflicting the national exchequer losses over Rs25 billion every year, he said.

The senator referred to a report of the Pakistan National Heart Association (PNHA), and said, more than 153,000 people die every year in Pakistan because of tobacco consumption.

At least 10.7 percent young adults are smokers despite the fact cigarettes are the cause behind 11 percent deaths.

"Use of cigarette is much bigger an issue than what we are facing these days in the form of the coronavirus," he said.

He said Pakistan was also a signatory to Framework Convention on Tobacco Control under which the government was supposed to discourage tobacco consumption in the country by increasing taxes and prices. The senator said that the companies were earning billions of rupees every year and showed their profits had doubled in last five years. But when we look at revenue it is still the same as was five years ago, he said.