Cigarettes: FBR generates additional Rs11.3bn under FED

ISLAMABAD: The Federal Board of Revenue (FBR) has so far generated an additional amount of Rs11.3 billion under the head of the Federal Excise Duty (FED) from cigarettes after announcement of the mini-budget in February 2023.

The impact of the mini-budget on tobacco sector was discussed in detail during an event organized by Society for the Protection of the Rights of the Child (SPARC) on the “Simulation Model on Tobacco Taxation” here on Wednesday.

Health activists Thursday urged the government to remain steadfast on its policy decision of increasing tobacco taxation in budget (2023-24) to generate additional revenue during the next fiscal year.

The “Simulation Model on Tobacco Taxation” explained how increased tobacco taxation is a win-win situation for the government and people of Pakistan.

Malik Imran, Country Head, Campaign for Tobacco-Free Kids (CTFK), mentioned that taxation is a key revenue source for any government and taxing non-essential items such as tobacco must be taxed to maximum in order to ensure fiscal imbalance, so the national exchequer does not suffer by it. He mentioned that due to government’s decision of increasing Federal Excise Duty (FED) on cigarettes in February 2023, an additional Rs11.3 billion FED was collected in fiscal year 2022-23 which is an increase of 9.7 percent from the previous year.

Furthermore, an additional Rs4.4 billion sales tax was collected during fiscal year 2022-23 which is an increase of 11.5% from the previous year. This additional Rs15.7 billion revenue makes up 0.201% of the GDP which is a significant boost for a struggling economy like Pakistan.

Imran mentioned that these self-explanatory figures reveal that increased taxation is beneficial for economy but the tobacco industry misleads everyone by crying the illicit trade excuse.

Imran added that the blown up figure of illicit trade is used to divert people from the underreporting. These companies under-report their production and then sell their non-reported products in the illicit market, causing billions of loss to the national exchequer.

Dr Ziauddin Islam, Former Technical Head, Tobacco Control Cell, Ministry of Health, said that tobacco is the largest silent killer in Pakistan as above 170,000 people die due to tobacco use each year. This pandemic also causes an annual economic burden of 615 billion which is 1.6% of Pakistan’s GDP.

He explained that increased prices bring a decrease to production and consumption which decrease the health cost burden. According to the estimates, there has been 31.7 percent decline in declared production of cigarettes in fiscal year 2022-23 compared to the previous year. Learning from this example, which is also recommended by World Health Organization, Pakistan should increase taxes on regular intervals so that inflation and per capita income is accounted for and Pakistanis remain protected from harms of tobacco products.

Khalil Ahmed Dogar, Programme Manager SPARC said that the children of Pakistan are being targeted by the tobacco industry so that “replacement smokers” could be recruited. Around 1200 Pakistani children between ages of 6-15 years start smoking every day.

Copyright Business Recorder, 2023