PTI govt plans to end third duty slab for cigarettes

Tax revenue from the industry dropped after introduction of this slab

ISLAMABAD: The government of Pakistan Tehreek-e-Insaf (PTI) has planned to end the third slab of federal excise duty (FED) for the cigarette industry in the upcoming budget for fiscal year 2019-20.

The Senate special committee on the decline in revenues from the tobacco industry, in its report submitted to the Senate, has already recommended the withdrawal of the third duty tier in order to enhance revenue collection from the sector. The Auditor General of Pakistan (AGP), in its special report, had found that cigarette manufacturers were involved in tax evasion of Rs33 billion.

The AGP revealed that a multinational company included its popular brands in the lowest tax tier - the third duty slab, which led to an increase in its sales and 50% reduction in tax payments. The National Accountability Bureau (NAB) is also investigating the scandal.

Senator Kalsoom Parveen had said earlier that tax collection from the cigarette industry had declined to Rs74 billion following the introduction of the third FED tier. She was also of the view that tax revenues could jump to Rs120 billion per annum if the third tier was abolished.

“I have already told Prime Minister Imran Khan and the minister for national health services that we want to increase the tax on cigarettes in the upcoming budget,” focal person on tobacco control Babar Atta told The Express Tribune.

He said tobacco was the biggest killer in Pakistan claiming 160,000 lives annually, adding that Pakistan had failed to implement the World Health Organisation’s Framework Convention on Tobacco Control (WHO-FCTC), which was a potential embarrassment for the country.

“My aim is to turn around things and make Pakistan a model FCTC country,” he said. “We want to increase the tax on cigarette industry to discourage its use.”

Atta emphasised that the government needed to work on different areas like increase in tax, alternative crops for farmers, tobacco cess collection from growers and pictorial health warnings.

He said the government wanted cigarette companies to rotate the pictorial health warnings after every three months. “New regulations are required for the display of cigarette packs on shops; there is also an issue of smuggling and steps will be taken to control it,” Atta said.

He revealed that he had held the maiden meeting with the tobacco control cell of the health ministry where some decisions were made.

A new health warning covering up to 60% of cigarette packs and the ban on all advertising including inside the shops would be implemented before May 31, he said, adding that the Prime Minister’s Office would be declared 100% tobacco-free. 

Published in The Express Tribune, May 15^th, 2019.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.