ISLAMABAD: The Federal Board of Revenue’s (FBR) latest Yearbook (2022-23) data confirmed that share of cigarettes in overall Federal Excise Duty (FED) collection has jumped to 40 percent in 2022-23 due to higher FED rates.
Malik Imran Ahmed, Country Director, Campaign for Tobacco Free Kids (CTFK) told Business Recorder that the FBR’s actual figures negates the claims of the tobacco industry that the raise in the FED has reduced its sales as well as consumption. The fact is that the higher FED on cigarettes has not only increased FBR’s revenue during 2022-23, but also decreased production as well as sales of the cigarettes. The government has simultaneously achieved two major objectives of increasing revenue as well as decrease in consumption of the cigarettes.
Quoting the FBR’s Yearbook data, he said that the FBR’s figures are authentic reflecting the actual data of the documented tobacco industry. The FBR’s book clearly said that, “one of the major sectors which contributed to FED revenues included cigarettes due to both inflation and increase in excise duty rates.”
Ultimately, the health cost burden would also come down as a result of decreased consumption as well as sales, he stated.
Imran said that the tobacco industry is making hue and cry about the closure of their production lines due to raise in the FED rates. Contrary to this, the factual position is evident from the recently released FBR’s official book which showed 40 percent share of the FED from cigarettes in the overall FED collection.
He strongly urged upon the FBR for immediate implementation of the latest recommendation of the World Bank (WB) for an increase in the Federal Excise Duty (FED) on cigarettes. The recommendation is part of the World Bank’s latest report-Pakistan Development Update (PDU).
Country Director, CTFK further highlighted that in its latest report titled ‘Pakistan Development Update,’ the World Bank highlighted that a significant revenue gain of 0.4 percent of GDP (Rs505.26 billion) could be achieved by applying the current rate on premium cigarettes (Rs16.50 per cigarette) to standard cigarettes as well. The report underscores the potential for economic and health benefits through this measure.
Imran added that aligning cigarette taxation with the WB’s recommendation is a crucial step toward safeguarding the health and well-being of Pakistan’s children. Higher excise duty on cigarettes not only deters smoking but also generates much-needed revenue for essential public services.
He recommended the implementation of a substantial increase in tobacco taxes to dissuade tobacco consumption and generate resources for vital public health initiatives. This proposed move aligns with the well-established recommendations of global health authorities such as the World Bank and the World Health Organization (WHO).
Highlighting the economic burden of tobacco-related illnesses, Imran emphasized the introduction of a health levy on tobacco products. The funds generated from this levy should be directed toward healthcare initiatives and educational programmes aimed at preventing tobacco use among children.
Copyright Business Recorder, 2023