Uniform excise duty rates on cigarette makers: IMF’s recommendations welcomed

ISLAMABAD: Capital Calling, an Islamabad-based think tank, Friday welcomed the recommendation of the International Monetary Fund (IMF) to impose uniform excise duty rates on both local and foreign cigarette manufacturers.

This independent research institution has also appreciated former health minister Dr Nadeem Jan calling for a 50 percent increase in taxes on cigarettes to make them harder to access for the masses.

The think tank has endorsed the minister’s statement rubbishing the propaganda that rises in taxes will lead to smuggling of cigarettes, resulting in a loss to the national exchequer.

According to estimates, cigarette prices are the cheapest in Pakistan compared to other regional countries, it said.

Reportedly, the recommendation is to apply a consistent excise rate in one slab to all domestically produced cigarettes, regardless of the manufacturer’s origin.

This means local and multinational manufacturers will face no discrimination in taxes. Currently cigarettes are taxed in two tiers, which is resulting low collection of taxation from the cigarette industry, it said.

Furthermore, the IMF has also proposed subjecting e-cigarettes to taxation similar to traditional tobacco products, citing comparable health impacts.

This recommendation is strictly in line with the guidelines set by the World Health Organization (WHO), said Dr Hassan Shehzad, from International Islamic University. He said due to the two-tier system, companies manage to place their cigarettes in lower tier which results into reduction in cigarette prices.

The objective of these recommendations is to ensure equitable taxation across cigarette products, regardless of their source.

The institutions formed to counter smoking suffer from lack of coordination and vision; hence, fast losing their relevance.

Capital Calling has demanded a reset of the mechanism to counter tobacco and fully implementation of the donor’s recommendations for uniformed tax on tobacco products, the report of the think tank added.

Copyright Business Recorder, 2024