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ISLAMABAD: Federal Minister for National Health Services (NHS) Aamer Mehmood Kiani has recommended that the finance ministry should withdraw the third tier of federal excise duty on cigarettes introduced in the Federal Budget 2017-18, which has resulted in the increase of cigarette production.

In a letter to Finance Minister Asad Umer, the health ministry said that after the introduction of the third tier in 2017, the production of local cigarettes has increased by 77pc in comparison to the previous year.

Before the announcement of last year’s financial budget, the NHS ministry suggested increasing the tax on cigarettes and recommended that the minimum tax should be Rs44 for a pack of 20 cigarettes but in the 2017-18 budget, a third tier for the tax was introduced due to which tax was reduced to as low as Rs16 for a pack of 20 cigarettes.

However, health experts said this will lead to an increase in the consumption of tobacco in Pakistan.

A report by the State Bank of Pakistan also showed that the production of cigarettes has increased by more than two times.

Last week, Mr Kiani had announced coordination with the finance ministry to raise taxes on tobacco products.

The letter says that as a signatory to the Framework Convention on Tobacco Control Pakistan has to implement tax and price policies on tobacco products as a way to reduce tobacco consumption.

Moreover, Pakistan is obliged to achieve the targets set in the Sustainable Development Goals.

Before the 2018-19 budget, the ministry has also requested the Federal Board of Revenue to withdraw the third tier of tax as it has resulted in an increase in the production of cigarettes.

It has also proposed the imposition of a ‘Health Levy on Cigarettes’, but this could not become part of the Finance Act, 2018.

According to a statement by the NHS, prior to the Federal Budget 2017-18, the ministry had proposed to tax the lower tier brands of cigarettes at Rs44 per pack of 20 cigarettes.

The proposal was based on a study according to which this amount of tax could reduce the number of smokers by 13.2pc, increase tax revenues by Rs39.5 billion, a reduction of 0.65 million premature deaths caused by smoking among current smokers and also prevent 2.55 million youth from taking up smoking. But the proposal was ignored.

According to an estimate by the NHS, tobacco use causes 160,100 deaths in Pakistan every year.

Almost 23.9 million adults currently use tobacco and the economic cost of smoking in Pakistan is over Rs143 billion.

Published in Dawn, September 6th, 2018