Decision to boost FED on cigarettes yields positive results

ISLAMABAD   -   The decision of government to boost the Federal Excise Duty (FED) on cigarettes has yielded a notable increase in revenue besides reducing the consumption of cigarette.

The Federal Board of Revenue (FBR) Yearbook 2022-23 substantiated the noteworthy development, according to which the share of cigarettes in the overall FED collection has escalated to 40 percent.

The share of the top ten sectors is about 94 percent and cigarette stood at top of the list followed by cement with 18.7 percent and concentrates 9.6 percent share, said the report.

This upswing is chiefly attributed to the imposition of higher FED rates on cigarettes. The fiscal year 2022-23 saw three significant upward revisions, ending a threeyear stagnation period.

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

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.

A study compiled by the Pakistan Institute of Development Economics (PIDE) signifies economic impact of the use of tobacco, according to which costs linked to human 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.

Independent experts have emphatically called upon the FBR to implement World Bank’s recommendation advising increase in FED on cigarettes, in a recent report Pakistan Development Update (PDU).

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