NHS urges Finance Ministry to withdraw 3rd slab of FED on cigarettes

Minister for National Health Services, Regulations, and Coordination Aamer Mehmood Kiani has recommended to the Ministry of Finance to withdraw the third slab of Federal Excise Duty (FED) on cigarettes introduced in the Federal Budget 2017-18 which resulted in an increase in cigarette production.

In a letter written to Federal Minister for Finance, Revenue and Economic Affairs Asad Umer, the Health Minister has informed that after the introduction of the third slab in 2017, the local production of cigarettes has increased by 77% compared to the production in the previous year. In last week, Health Minister had announced to coordinate with the Ministry of Finance to raise taxes on tobacco products.

The letter stated that as a signatory to Framework Convention on Tobacco Control (FCTC), Pakistan has to implement tax and price policies on tobacco products as a way to reduce tobacco consumption. Moreover, Pakistan is obligated to achieve the targets set in Sustainable Development Goals (SDGs).

Prior to Federal Budget 2017-18, the Ministry of National Health Services proposed to tax the lower slab or tier of all brands of cigarettes @Rs.44 per pack of 20 cigarettes.

The proposal was based on a study, according to which, a uniform specific excise tax that accounts for Rs 44 per pack of 20 cigarettes could reduce number of smokers by 13.2%, increase tax revenues by Rs 39.5 billion, leading to reduction of 0.65 million premature deaths caused by smoking among current smokers, while also preventing 2.55 million youth from taking up smoking.

In the Finance Act, 2017 a new slab/tier with a reduction in FED (like Rs16) was created, which resulted in the decrease in prices of the brands most sold.

Prior to Federal Budget 2017-18, the ministry requested the FBR to withdraw the third slab or tier as it resulted in increased production of cigarettes. In addition, it was proposed to impose a levy with the name of “Health Levy on Cigarettes”, but it could not become part of the Finance Act, 2018.

(APP)