Published Date: Jan 5, 2021
FED collected from cigarettes remains lowest: SDPI study
ISLAMABAD: The federal excise duty (FED) collected from cigarettes in Pakistan remains the lowest as compared to the other regional countries, resulting in an enormous increase of cigarette consumption, and revenue loss to the Federal Board of Revenue (FBR).
This has been revealed in a research study, “Regional tobacco regime and its implications for health,” conducted and released by the Sustainable Development Policy Institute (SDPI), a think-tank in Islamabad, here on Monday. The latest SDPI study said that the main factor leading towards the failure of tax regime was that the success was gauged through revenue generation instead of achieving health goals.
The FBR, a central body to administer the whole taxation process, faced severe resource constraints to effectively implement a suitable tax regime, it said. Pakistan with the lowest prices of cigarettes in the world was meant to provide tax relaxation to the tobacco industry as happened in the year 2017, wherein, a third tier had been introduced by the FBR with 50 percent decrease in the excise duty.
The study said tobacco industry flourished by leaps and bounds on the behest of the revenue to be collected by the national exchequer.
There is a clear lack of objective policy, policy instruments and actions on part of the FBR that can ensure decent tax rate and higher prices. It also leads to an increase in health issues vis-à-vis revenue generation is not sufficient enough to cater the needs of the prevalent health challenges being faced by Pakistan, it said, adding that increase in tobacco taxation is the need of the hour for controlling the consumption of cigarettes, and for increasing the revenue.
According to the World Health Organization, more than 1.3 billion people consume tobacco products daily, with around eight million deaths annually across the globe. The WHO has termed tobacco as an epidemic which has very severe short- and long-term repercussions on public health. The WHO asserts that high taxation and increased prices always resulted in the decreased use of tobacco products.
If all the countries impose at least 50 percent excise duty on a cigarette pack, the number of tobacco consumers would decrease by 49 million.
In Pakistan, there are 22 million tobacco users, wherein 60 percent are adolescents. Resultantly, 1.5 million cases of oral cancer are reported by the Pakistan Medical Association on an yearly basis.