Govt Can Collect Additional Rs50 Billion in Tobacco Tax

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ISLAMABAD – The government can collect an additional Rs50 billion in taxes from the tobacco industry in the next fiscal year if the prices of the cigarettes are increased in the upcoming budget in line with other consumables.

A group of anti-tobacco activists has proposed the government in writing to increase the federal excise duty on cigarettes by at least 40 percent in the budget for fiscal year 2021-22 to collect the additional revenue and reduce the health burden of tobacco-related diseases.

 

The Federal Board of Revenue (FBR) is set to collect Rs127 billion in taxes from the tobacco industry this year while it could raise its revenue to Rs177 billion in the next fiscal year by increasing the FED on the products. They said that cigarette prices in Pakistan have not increased for the last two years while prices of other consumables like chicken, eggs, milk and sugar have soared manifold during the same time.

According to the data, the price of beef has increased 32 percent; chicken 168 percent; eggs 83 percent; milk 51 percent; sugar 54 percent and wheat flour 76 percent in the last two years. But the cigarettes’ prices have remained unchanged in the last two years.

The tobacco-related diseases were killing around 166,000 people in Pakistan annually while their health cost was recorded over Rs615 billion, according to a recent research study by the PIDE.

The activists have urged the government to shun the influence of the multinational tobacco companies and increase the cigarettes prices in the budget up to at least 40 percent.

The document shared by the anti-tobacco activists said that tobacco taxes in Pakistan were low and cigarettes were cheap. The average excise tax share is 45.4 percent of the retail price, much lower than the WHO recommendation that excise tax be at least 70 percent of the retail price, the document said.
It said the cigarette prices in Pakistan are among the lowest in the world, and the effective excise tax rate on cigarettes in 2020-21 is still the same as it was in 2016-17.

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