FBR allowed to impose health levy on tobacco products, sugary drinks

Published May 28, 2021
The law ministry has said the proposed federal health levy would fall within the definition of fiscal laws for the purpose of the act. — AP/File
The law ministry has said the proposed federal health levy would fall within the definition of fiscal laws for the purpose of the act. — AP/File

ISLAMABAD: The Ministry of Law and Justice has allowed the Federal Board of Revenue (FBR) to impose health levy on tobacco products and sugary drinks through an ordinary bill or through an ordinance before the upcoming budget.

In response to a letter from the FBR, the law ministry has said the proposed federal health levy would fall within the definition of fiscal laws for the purpose of the act.

“In the light of the restriction in the use of funds collected pursuant to the proposed law, it will not constitute a money bill,” the ministry said in a letter to the FBR.

The imposition of the federal health levy on the manufacturing and sale of harmful products falls within the domain of the parliament under the Constitution, therefore, the imposition of the said levy on such sale and manufacturing would be applicable throughout Pakistan, the law ministry said.

The federal cabinet approved the health levy in 2019, but it is yet to be implemented. The levy proposes a Rs10 per cigarette tax to discourage smoking among the youth and help the government raise its revenue from the tobacco products. Moreover, it suggested at least Re1 tax on sugary drinks.

Cabinet approved health levy in 2019 but is yet to be implemented

According to data of the Ministry of National Health Services (NHS), smoking has been resulting in 166,000 deaths in Pakistan each year and according to a study tobacco-related diseases were causing an annual loss of Rs615 billion to the national exchequer.

Anti-tobacco activists have welcomed the law ministry’s decision and urged the FBR to enforce the levy across the country before the upcoming budget.

Country Head of Campaign for Tobacco Free Kids Malik Imran said the FBR should implement the health levy to discourage smoking and bring down the overall health cost in the country before the upcoming budget.

He said the FBR should not wait for the budget and start collecting the extra revenue through the health levy by enforcing it forthwith.

Mr Imran said the implementation of the health levy and increase on tobacco taxes should be treated as two separate things by the FBR and the government.

The health levy should be enforced before the passage of the budget while taxes on cigarettes should be separately enhanced in the budget to make the tobacco products costly and make them out of the reach of children and youth, he suggested.

Earlier, the ministry of NHS also wrote a letter to the Ministry of Finance for imposition of the federal health levy to raise the government revenue and discourage smoking.

There are 425 million diabetics, one out of every 11 in the world, while one out of every five in Pakistan. One out of every six pregnant women in Pakistan has diabetes. Pakistan is currently the fourth country having most number of diabetics.

Published in Dawn, May 28th, 2021

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