ISLAMABAD - The Ministry of National Health Services, Regulations & Coordination has recommended to increase federal excise duty on all brands of cigarettes priced Rs72 and less by up to Rs44 per pack of 20 cigarettes.
The recommendation was shared with the Ministry of Finance Friday by the health ministry for implementation from fiscal year 2016-17.
Pakistan signed Framework Convention on Tobacco Control (FCTC) in 2004. Under Article 6 of FCTC, 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 are considered the single most effective option for reducing tobacco use and increasing revenues. Higher tobacco taxes save money by reducing tobacco-related health care costs, including Medicaid expenses. 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 health ministry. Experts from Federal Board of Revenue, The Union (Bloomberg Partner), World Health Organisation, World Bank and Tobacco Control Cell were members of the working group.
After deliberations, the working group recommended to increase taxes on tobacco products on all brands of cigarettes priced Rs72 and less from Rs28 to Rs44 per pack of 20 cigarettes (from Rs.14.20 to Rs 22 per 10 cigarettes) with annual adjustment to tobacco tax rates introduced to minimise the impact of inflation and per capita income growth.
The brands that fall in the upper slab - costing more than Rs72 - have already been imposed with Rs. 64 tax per pack. The enhanced taxation for the lower slab was especially recommended to decrease the sale of most sold brands, officials said.
The group also recommended abolishing all the exemptions of tobacco taxes provided to Navy, President of Pakistan, the President of Azad Jammu & Kashmir and the governors of the provinces, members of their families and guests.
It also recommended earmarking 2 percent of tobacco tax revenues for Prime Minister’s National Health Program for treatment of non-communicable diseases.
According to a research study on tobacco taxation in Pakistan jointly conducted by FBR, World Bank, University of Toronto, Johns Hopkins University, University of Illinois at Chicago and Beaconhouse National University, a uniform specific excise tax that accounts for Rs44 per pack of 20 cigarettes could reduce number of smokers by 13.2 percent, 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.
Officials said the measure will be critical to reducing consumption of tobacco products and save lives of people.