Ministry of National Health Services, Regulations and Coordination will push the government to include "Health Tax" in the upcoming budget for fiscal year 2019-20 to cut rising tobacco consumption and increase the revenue, officials said on Saturday. A senior official of the ministry told Business Recorder that they would soon forward a "Health Tax 2019" summary to the relevant government departments, suggesting additional taxes on tobacco products and beverages to discourage their consumption.
Earlier in February this year, the Federal Cabinet rejected the proposal of the Health Ministry for imposition of 'sin tax' on consumption of tobacco and beverages owing to the legal and administrative lacunae in enforcement of the levy.
Under the "Health Tax", the ministry had proposed imposing additional Rs10 on each cigarette pack, while Re01 on 250ml beverage bottle.
The official said that Federal Board of Revenue (FBR) opposed the imposition of health levy as it would only increase taxation on multinational companies that are already paying "heavy taxes."
A special audit report on causes of decline in tax collection of tobacco sector has revealed that the cigarette manufacturing industry was involved in tax evasion of Rs33 billion, and recommended the withdrawal of third tier of the taxation system for the tobacco industry, which has resulted in the annual loss.
It suggested the government to increase Federal Excise Duty (FED) on annual basis to comply with the World Health Organisation (WHO) rules, as this will also result in higher revenues for the government. According to the WHO, minimum 70 percent of retail price is excise tax but in Pakistan 45.79 percent of retail price is excise tax.
The economic cost of smoking in Pakistan amounts to Rs143.208 billion annually and it includes direct costs related to healthcare expenditures and indirect costs related to lost productivity due to early mortality and morbidity, revealed a report.
The report also revealed that every year more than 160,100 people die in Pakistan of tobacco-caused diseases and still more than 125,000 children (10-14 years old) and 14,737,000 adults (15+ years old) continue to use tobacco each day. The health ministry official said that keeping in view all this economic and health loss, they have been trying to convince the Federal Cabinet, FBR and other relevant departments for imposition of the "Health Tax" in the upcoming budget.
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