Minister for National Health Services Saira Afzal Tarar suggested increasing Federal Excise Duty (FED) on lower slab of all brands of cigarettes to Rs 44 per pack of 20 cigarettes in 2017-18 budget, in a bid to reduce tobacco consumption, as tobacco is a cause of thousands of deaths (approximately 108,800) annually in Pakistan.
In separate letters to finance minister and special assistant to the prime minister on revenue, she suggested increasing the tax rate for the lower slab of all brands of cigarettes to Rs.44 per pack of 20 cigarettes, which is currently Rs.32.98 and for the upper slab it was recommended to increase prices to Rs.74.10 per packet.
The minister also requested to earmark 2 per cent of tobacco tax revenues for Prime Minister’s national health program for treatment of Non-Communicable Diseases (NCDs)/tobacco control.
Pakistan signed Framework Convention on Tobacco Control (FCTC) in 2004. Under its Article 6, Pakistan has to implement tax and price policies on tobacco products as a way to reduce tobacco consumption. Tobacco taxes that translate into price increases of cigarettes are considered the single most effective option for reducing tobacco use and increasing revenues for the government.
In order to finalise recommendations to increase taxes on tobacco products in line with FCTC recommendations, a technical working group on tobacco taxation was formed by the ministry.
Experts from the Federal Board of Revenue (FBR), Bloomberg Partners, World Health Organisation, World Bank and Tobacco Control Cell were members of the group. The group has finalised recommendations for increasing taxes on tobacco products in the federal budget for the year 2017-18.
It was recommended that the lower slab of all brands of cigarettes may be taxed at the rate of Rs 44 per pack of 20 cigarettes. Packets of 20 cigarettes which have a retail price of up to Rs88 are ranked in the lower slab and those with the retail price of over Rs.88 are included in the upper slab.
According to a research study on tobacco taxation in Pakistan conducted by the FBR, World Bank, University of Toronto, Johns Hopkins University, University of Illinois at Chicago and other institutes, a uniform specific excise tax that accounted for Rs.44 per pack of 20 cigarettes could reduce the number of smokers by 13.2 per cent.
Moreover, the study also showed that if the tax is increased to Rs.44 per pack, the revenue would increase up to Rs 39.5 billion, avoiding 0.65 million premature deaths caused by smoking among current smokers.
The group has also recommended removing all exemptions of tobacco taxes provided to Navy, President of Pakistan, the President of Azad Jammu and Kashmir and all Governors of the Provinces, (including members of their families and guests) under S No. 4 of the Schedule 3 of federal excise act. In order to monitor the production of cigarettes, it was recommended to implement electronic monitoring system (tracking and tracing system) on a priority basis.
In Pakistan, tobacco is a cause of death of around 108,800 persons every year. This is 298 deaths per day. This measure is critical to reducing consumption of tobacco products for saving lives of people of Pakistan.
