Increasing GHW size on cigarette packets: FBR to inform inter-ministerial body about revenue loss

The Federal Board of Revenue (FBR) will inform the Inter-ministerial committee on March 31 (Tuesday) that huge loss of Federal Excise Duty (FED) is expected following increase in the size of Graphic Health Warning (GHW) on cigarette packs up to 85 percent.
Sources told Business Recorder here on Monday that the FBR had finalised working on the expected revenue impact of the proposed measures and the same would be shared with the Inter-ministerial committee. The FBR will present supportive data and analysis about the revenue implications on overall indirect taxes collection.
Reportedly, India is putting on hold a decision to implement 85 percent pictographic and text warning on tobacco packs. The move, notified in October 2014 by the health ministry, was originally scheduled to kick off on April 1. It mandated that Indian companies start covering 85 percent of cigarette packs with pictorial and text warnings, compared with 40 percent on the front side at present. It is reported that the move comes after a parliamentary panel of India recommended that the proposal be kept in abeyance until its socioeconomic ramifications are evaluated.
Meanwhile, sources said that the government has extended date for graphical health warning on cigarette packs up to 60 days, an important meeting of Inter-ministerial committee will be held on Tuesday (today) to discuss the financial issues pertaining space extension on cigarette packs up to 85 percent.
Sources said that the committee will discuss the future strategy regarding the pictorial warning on cigarette packs after consultation with all stakeholders including WHO, tobacco farmers, retailers, distributors and cigarette manufacturers.
According to sources, the decision to extend the deadline by 60 days was taken to facilitate the working of the inter-ministerial committee constituted by Ministry of Finance on March 13.
The committee has been set up to review the impact of 85 percent pictorial health warning on revenue and smuggling, impact of tobacco use and pictorial health warning on public health, and to consult with stakeholders regarding implementation issues.
The committee comprises members from Cabinet Division, Prime Minister Secretariat and FBR. Minister of State National Health Services, Regulations and Coordination is heading the Committee while Secretary Health is also its member.
The tax authorities have estimated a colossal revenue loss in the collection of Federal Excise Duty (FED), against the estimates of over Rs 103 billion from cigarette industry in 2014-15 following increase in the size of Graphical Health Warning (GHW) on cigarette packs. As far as revenue collection is concerned, it would be a serious setback to the FED head of indirect taxes collection during 2014-15.