ISLAMABAD: The cigarettes remained top revenue spinner of federal excise duty (FED) after raise of FED rates on tobacco products during 2022-23.

The Federal Board of Revenue (FBR) Yearbook (2022-23) endorsed that the share of cigarettes in the overall Federal Excise Duty (FED) collection has risen to 40 percent.

Within the FED collection, the report said that the share of the top ten sectors is about 94 percent and cigarettes stood at top of the list followed by cement with 18.7 percent and beverage concentrates 9.6 percent share.

Experts linked this raise in the FED collection with the imposition of higher FED rates on cigarettes. The fiscal year 2022-23 saw three significant upward revisions, ending a three-year stagnation period.

“One of the major sectors which contributed to FED revenues included cigarettes due to both inflation and increase in excise duty rates,” the FBR Yearbook said.

The government’s decision to raise the Federal Excise Duty (FED) on cigarettes has yielded a notable increase in revenue while simultaneously contributing to a reduction in cigarette consumption.

Experts said that as cigarette consumption diminishes, the consequential reduction in health-related issues could result in a positive impact on healthcare expenditures, contributing to a healthier and more sustainable society.

The decrease in tobacco usage also aligns with the broader public health objective.

A study by the Pakistan Institute of Development Economics (PIDE) brings attention to the significant economic impact of the use of tobacco, according to which costs linked to diseases and deaths resulting from smoking in 2019 reached a staggering Rs 615.07 billion ($3.85 billion), equivalent to 1.6 percent of the GDP.

Commenting on the development, Malik Imran Ahmed, Country Director, Campaign for Tobacco Free Kids (CTFK) said that the tobacco industry had expressed discontent over the increase of FED claiming it would result in the shutdown.

However, the FBR’s data has challenged the industry’s assertion showing a significant 40 percent share of the FED.

Copyright Business Recorder, 2024

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