ISLAMABAD: The Ministry of National Health Services (NHS) has asked the Federal Board of Revenue (FBR) to withdraw the third tier of federal excise duty so that the expansive use of tobacco products can be discouraged.

In a letter earlier this month, Secretary Health Ministry retired Capt Zahid Saeed told FBR that the Pakistan National Heart Association (PNHA) had in its letter to the prime minister requested that the third tier of federal excise duty on cigarette packs created in the Finance Act, 2017 and continued in the Finance Act, 2018, as it is increasing the prevalence of smoking in the country.

The letter said that tobacco is the cause of 160,100 deaths in the country every year and that some 29.3 million adults currently use tobacco in some form. The economic cost of smoking in Pakistan amounts to Rs143.2 billion, mostly due to health reasons.

Third tier of tax is increasing use of tobacco smoking in the country, NHS secretary tells FBR in a letter

It says that as signatory to the Framework Convention on Tobacco Control, Pakistan has to implement tax and price policies on tobacco products to reduce its consumption.

According to World Health Organisation WHO, tobacco excise taxes should account for at least 70pc of retail prices for tobacco products. The secretary health added that Pakistan is obliged to achieve the targets set in the sustainable development goals.

Under target 3(4), Pakistan has to reduce one third the premature mortality from non-communicable diseases through prevention and treatment and promote mental health and wellbeing by 2030.

Tobacco taxes that translate into price increases are considered the single most effective option for reducing tobacco use and increasing revenue. Higher tobacco taxes save money by reducing health related health care cost.

According to a WHO study, a 10pc increase in tobacco prices will reduce consumption up to five or 8pc in low and middle income countries.

Meanwhile, PNHA said in its complaint that prior to the federal budget 2017-18, the health ministry had proposed to tax low cost cigarettes at Rs44 per pack of 20.

It was also requested that a tracing and tracking system be implemented to curb the illicit cigarette trade in tobacco products. The proposal was based on a study according to which a uniform, specific excise tax which accounts for Rs44 per pack of 20 can reduce the number of smokers by 13.2pc and revenue increase by Rs39.5 billion, leading to a reduction of 0.65 million premature deaths among current smokers.

Despite the proposal, a new tier with a reduction in the federal excise duty was introduced in the Finance Act, 2017, PNHA said.

On Jan 24, 2018 the ministry requested FBR to withdraw the third tier immediately because in has resulted in the increased production of cigarettes.

In the Finance Act 2018, the third slab was continued but federal excise duty on all three categories of brands was increased from Rs 16 to Rs 17.08, Rs 33.4 to Rs 35.52 and Rs 74.8 to Rs 79.4.

According to the Pakistan Economic Survey 2017-18, cigarette production in Pakistan between July 2017 and Feb 2018 increased by 77pc compared to same period last year.

Published in Dawn, July 19th, 2018