Third-tier tax regime on cigarettes likely to go

Published
0

ISLAMABAD: The third tier of excise duty on cigarette price is likely to be withdrawn in the upcoming federal budget as pro­­posed by the National Assem­bly’s Standing Commit­tee on Finance.

The committee had recommended that the two-tier excise duty structure be introduced in the tobacco sector by abolishing the third tier as it was making the low-cost cigarettes cheaper.

State Minister for Finance Rana Mohammad Afzal talking to media on Wednesday in the Parliament House said that finance ministry has prepared its recommendations in the light of proposal submitted by Ministry of Health, civil society members including those operating in the health sector.

Meanwhile, a member of the committee said that the finance ministry had initiated a study in this regard and a decision is set to be finalised.

Those who presented case against the third-tier taxation regime on tobacco included by Ministry of Health, Sus­tainable Development Policy Institute (SDPI) and Pakistan National Heart Association (PANAH).

They recommended made to the NA body was that the current federal excise duty (FED) should be reverted back to the old two tier structure and enforcement should also be strengthened for containing the illicit trade of cigarette in the country.

Similarly, there should also be policy rationalism to bring down the illicit trade of cigarette through better enforcement not through reduction in prices of cigarettes.

The health ministry after conducting a study to assess the volume of illicit cigarette brands in Pakistan has asked for policy review of reducing cigarette prices to save lives. The study was done in the backdrop of a claim by the tobacco industry that the market share of illicit brands in Pakistan has risen exponentially due to high tobacco taxes and now stands at 40 per cent of the total cigarette market.

However, contrary to the claim of the local tobacco industry about the market share of non-duty paid/illicit cigarette brands, this study has revealed that the actual market share of such cigarettes had stood at 10pc, instead of the exaggerated 40pc mentioned by the manufacturers.

Meanwhile, the state minister said that special measures have been taken by the government to curb illicit trade and smuggling of cigarette.

Published in Dawn, April 26th, 2018

Follow Dawn Business on X, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Climate challenges
Updated 13 Nov, 2026

Climate challenges

Pakistan cannot afford to confront its climate crises one disaster, one season and one international summit at a time.
Under fire
Updated 13 Nov, 2026

Under fire

KP police are increasingly vulnerable as they play a frontline role in ongoing operations against terrorists.
Used car imports
13 Nov, 2026

Used car imports

THE government’s effort to restrict used car imports appears to be faltering. So suggest the numbers. Despite...
Iran status quo
Updated 12 Nov, 2026

Iran status quo

The US cannot hold the world hostage in order to find an honourable exit from a disastrous war for which it has only itself — and Israel — to blame.
Unspent funds
12 Nov, 2026

Unspent funds

THE slow pace of development spending shows how public investment continues to bear the brunt of efforts to create a...
Homes and hope
12 Nov, 2026

Homes and hope

THE completion of more than one million homes for families displaced by the 2022 floods is a moment worth...