Increase in FED on cigarettes: Health activists satisfied with new govt measure

ISLAMABAD: Health activists Friday expressed satisfaction over signing of Finance (Supplementary) Act, 2023 by President Arif Alvi to confirm 150 percent raise in the Federal Excise Duty (FED) on cigarettes.

President has given assent to the Finance (Supplementary) Act 2023 to implement additional taxation measures of Rs170 billion including major FED raise in the two slabs of cigarettes.

Responding to the President’s signing of the Finance Act 2023 on Thursday, Society for the Protection of the Rights of the Child (SPARC) stated that the decision will go a long way in solving Pakistan’s financial woes and recommended government to remain steadfast against tobacco industry’s misinformation campaign.

Malik Imran, country head, Campaign for tobacco-free kids (CTFK), said that tobacco induced disease causes an annual economic burden of 615 billion which is 1.6% of Pakistan’s GDP. On the other hand, the revenue generated from the tobacco industry is 120 billion. Therefore, everyone must appreciate government’s decision which is in interest of Pakistan’s health and economy.

He said the government needs to stand firm because in the past, tobacco industry opposed taxing tobacco using false claims of illicit trade and counterfeit products. “Listening to their lies will only push us back,” he said.

Dr Hassan Shehzad, a university teacher, said it is unfortunate that a misinformation campaign is being run on social media to get undue tax favors for cigarette mafia.

He said that taxes on cigarettes been increased in Europe, the US, China and other parts of the world. Increasing tax on cigarettes is the only way out, especially in post-corona era, he said.

Dr Muhammad Zaman, a leading social scientist, said that there is a need to do research on this subject in Pakistani perspective. He said it is unfortunate that quality research work has not been done on this crucial subject in the country. If the harms of cigarettes are researched properly, the decision-makers will surely go for more taxes on it, he concluded.

“New taxes on cigarettes are being put in place in European Union. It will significantly increase cigarette price and introduce a new method of revenue generation. Some EU countries including France and Germany have recently increased taxes without waiting for a collective EU decision in this regard,” said Dr Shehzad.

It is important to note that cigarette prices are still the lowest in the region despite the recent tax increase. For example the price of Capstan (by Pall Mall) is retailing for $0.8 per pack, whereas the same is being sold for $2.22 in Sri Lanka. Similarly, Gold Leaf is being sold for $1.9 in Pakistan but $2.51 in India and $3.90 in Sri Lanka. This shows that there is still a need to enhance the tax amount further to truly curb cigarette smoking.

Copyright Business Recorder, 2023