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Finance Ministry ponders more taxes to curb tobacco use

Finance Ministry ponders more taxes to curb tobacco use

Ishaq Dar-led ministry has sent proposal to Federal Board of Revenue (FBR) to increase taxes on tobacco products in Budget 2014-15 

 

ISLAMABAD: The Finance Ministry proposed an increase in the excise duty by 23% and 13% on lower to upper slab of tobacco products respectively with an objective to curtail tobacco use.

The ministry considered taxes as the single-most effective option for reducing tobacco use and increasing revenues. The ministry established an opinion based on a research which showed that higher taxes were effective in reducing tobacco use among lower-income groups and in preventing the uptake of smoking by young people.

A source at the Finance Ministry told Customs Today on Monday that the ministry had sent a proposal to the Federal Board of Revenue (FBR) to increase taxes on tobacco products in Budget 2014-15, resultantly; excise duty was increased in the Finance Act 2014.

The source said that a working group consisting of technical experts from the FBR and other stakeholders was being formed to develop an implementation mechanism to increase taxes on tobacco products and earmarking of tobacco tax revenues for tobacco control measures, including treating diseases caused by tobacco use in the upcoming Budget 2015-16,

“The working group will review the existing tobacco tax structure and devise a strategy/mechanism to increase taxes on tobacco products in line with Framework Convention on Tobacco Control (FCTC) recommendations,” he added.

The source said that that the FBR and Customs Intelligence authorities were coordinating with Tobacco Control Cell, the focal point for this initiative for the implementation of FCTC Articles related to increasing taxes on tobacco products and controlling illicit trade of tobacco products.

“The Finance Ministry is also planning to launch a National Programme by developing and approving a PC-1 in this regard because articles of FCTC related to tobacco control were being compromised for non allocation of budget for this purpose,” the source added.

According to a study conducted by the Union in collaboration with the FBR and other stakeholders, the source said that tobacco taxation in Pakistan, a uniform specific tax that accounts for 70% of average tax price could reduce overall cigarettes consumption by 7.5%, increase tax revenues by Rs 27.2 billion, lead to over half a million users quitting and reducing premature deaths among current adult smokers by over 180,000, while preventing uptake of smoking by 725,000 young people.