Proposals for higher tax receipts from cigarette manufacturers awaited

Senator says special body will finalise recommendations in a day or two

Our Correspondent February 27, 2019
Senator says special body will finalise recommendations in a day or two. PHOTO: FILE

ISLAMABAD: A Senate special committee on decline in tax collection from the cigarette manufacturing industry has not yet recommended measures for enhancing revenue collection from the industry.

The parliamentary panel has held several meetings over the past seven months, but has failed to finalise report on the measures required to increase tax receipts from the cigarette manufacturing industry, which have gone down in recent months.

“We will finalise recommendations relating to the cigarette industry in one or two days and a report will be presented to the Senate for review,” remarked Senator Kalsoom Parveen, Convener of the Senate special committee, while talking to The Express Tribune.

Cigarette manufacturer says sin tax will cut market share

The Ministry of National Health Services, Regulations and Coordination is pressing the government to increase tax rate on the cigarette manufacturers in order to discourage its consumption.

The ministry also recently requested the cabinet to approve a sin tax bill aimed at imposing a tax of Rs10 on each cigarette packet, which would jack up prices and discourage cigarette consumption. However, the cabinet did not approve the bill following opposition from the Federal Board of Revenue (FBR).

According to officials, the FBR was of the view that the imposition of Rs10 in sin tax would have a negative impact on those companies which had already been paying heavy taxes.

The FBR believed that domestic cigarette manufacturers would get an annual benefit of Rs10 billion while multinational companies (MNCs), which paid around Rs89 billion in annual taxes, would face losses.

Industry urges government to stop sale of illicit cigarettes

The decrease in earnings of the MNCs would cast a negative impact on the FBR’s revenue collection, they said. The Ministry of National Health Services had presented a bill titled “The Federal Health Levy Bill 2019” to the federal cabinet for approval prior to presenting the bill in parliament for its conversion into law for enforcement.

However, the cabinet, in its meeting held on Thursday last week, deferred decision on the bill.

In Pakistan, cigarette consumption causes around 108,800 deaths annually, which means 298 deaths per day.

The revenue earned from the industry will be diverted to schemes, programmes, activities and research for improvement of general health of the people and reducing human and economic costs due to various diseases.

The cigarette industry in Pakistan faces a critical challenge due to the presence of non-tax and duty paid cigarettes on a wide scale. 

Published in The Express Tribune, February 27th, 2019.

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