Budget 2021-22: FBR estimates it will collect Rs127bn taxes from tobacco industry

ISLAMABAD: The Federal Board of Revenue (FBR) has estimated to collect Rs127 billion taxes from the tobacco industry during 2020-21 against projected revenue of Rs177 billion in 2021-22 following raise in the Federal Excise Duty (FED) on cigarettes in the federal budget to be announced today (Friday).

This has been stated by a group of tax experts and anti-tobacco activists in a communication to the Ministry of Finance to share the budget proposals and revenue estimates for 2021-22.

They stated that the government can generate additional revenue of Rs 50 billion in taxes from the tobacco industry in the next fiscal year if the cigarette prices are increased in the upcoming budget in line with other consumables.

A group of anti-tobacco activists has also proposed the government in writing to increase the federal excise duty on cigarettes by at least 40 percent in the budget for fiscal year 2021-22 to collect the additional revenue and reduce the health burden of tobacco-related diseases.

They said the cigarette prices in Pakistan have not increased for the last two years while prices of other consumables like chicken, eggs, milk and sugar have soared manifold during the same time.

According to the data, the price of beef has increased 32 percent, chicken 168 percent, eggs 83 percent, milk 51 percent, sugar 54 percent, and wheat flour 76 percent in the last two years. Contrary to this, the cigarette prices have remained unchanged during the last two years.

The tobacco-related diseases were killing around 166,000 people in Pakistan annually while their health cost was recorded over Rs615 billion, according to a recent research study by the PIDE.

The document shared by the anti-tobacco activists said that tobacco taxes in Pakistan were low and cigarettes were cheap.

The average excise tax share is 45.4 percent of the retail price, much lower than the WHO recommendation that excise tax be at least 70 percent of the retail price, the document said.

Copyright Business Recorder, 2021