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Pakistan’s Health Ministry advises FBR to reconsider policy of reducing tax on cigarettes

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As expected, Zahid Mishawani, 17, breather last in hospital before his parents. Mother started screaming as her only son died before her. Family members burst into tears following his death.

BY KASWAR KLASRA

ISLAMABAD:  “I’m sorry, there’s nothing more we can do” doctor told 52 years old Zareena whose son, a patient of lungs cancer, has been admitted to a leading government-run hospital.

As expected, Zahid Mishawani, 17, breather last in hospital before his parents. Mother started screaming as her only son died before her. Family members burst into tears following his death.

Like Zahid, as many as 160,000 people die every year in Pakistan due to Tobacco-caused diseases.

The government in Pakistan just seems helpless to curb on Tobacco consumption.

Ironically, cigarette production during July-October, 2017 has been increased from 11.48 Billion Sticks to 19.66 Billion Sticks. This is about 71% growth in local cigarette production.

Ironically, In Finance Act, 2017, a new slab with reduction in FED (i.e. Rs. 16) was created. According to FBR, the third tier was introduced to tackle the menace of illicit non-duty paid cigarettes, besides significant growth in revenues was also expected.

However, it has been observed that reduction in tax on cigarette increased its consumption nationwide.

Utterly alarmed by the growing numbers of deaths caused by tobacco-caused-diseases annually, and huge increase in local cigarette production in Pakistan, The Senate Standing committee on National Health Service regulations and coordination (NHRSC) has strongly recommended the Federal Board of Revenue not to continue the policy of decreasing taxes on tobacco products at the costs of millions of Pakistanis.

The Senate Standing committee on National health service regulations and coordination (NHRSC), in its meeting held on 5th December , 2017, has taken strong notice of the decrease in the prices of Cigarettes and strongly recommended to FBR to reconsider the policy, the committee has also detected the FBR to carry out a three year audit of tobacco companies to determine whether they are involved in tax evasion and recommended to introduce the tracking and tracing system for tobacco companies to stop tax evasion.

Tobacco taxes that translate into price increases are considered the single most effective option for reducing tobacco use and increasing revenues. Higher tobacco taxes save money by reducing tobacco related health care costs. According to WHO study, a 10% increase in tobacco prices will reduce consumption up to 8% in low-and middle-income countries.

Prior to Federal Budget 2017-18, Ministry of National Health Services, Regulations and coordination, proposed to tax the lower slab of all brands of cigarette @Rs.44 per pack of 20 cigarettes.

According to the study, a uniform specific excise tax that accounts for Rs.44 per pack of 20 cigarettes could reduce number of smokers by 13.2% increase tax revenues by Rs39.5 billion, leading to reduction of 0.65million premature deaths caused by smoking among current smokers, while also preventing 2.55 million youth from taking up smoking. In addition to measures to curb illicit trade in tobacco products (Annex-II)

According to FBR, during first 5 months of FY2017-18, there is about 11% growth in cigarette tax revenues from Rs.20, 404 million to Rs.22, 623 million. Parallel to this, according to State Bank of Pakistan, cigarette production during July-October, 2017 has been increased from 11.48 Billion Sticks to 19.66 Billion Sticks. This is about 71% growth in local cigarette production.

The committee observed even if we consider that the cigarette production growth has fully captured the illicit, non-duty paid cigarettes market and illicit trade in tobacco products has fully been eliminated, still there is about 49% growth in local market cigarette production.

“This growth in local cigarette production will definitely increase cigarette consumption in the country as these cigarettes will be sold locally. Resultantly, tobacco related deaths in the country will be increased in addition to increase in tobacco-related health care costs,” Ministry observed.

“Foregoing in view, it is requested to reconsider the policy of reducing cigarette prices and withdraw the 3rd Slab created in Finance Act, 2017 immediately to save lives of people of Pakistan. Moreover, to curb illicit trade in tobacco products, the tracking and tracing system for tobacco companies should be implemented on priority basis,” Ministry requested.

Reportedly, every year, over 160,100 of the people in the country are killed by tobacco-caused diseases. Still, more than 125,000 children (10-14 years old) and 14.73 million adults (15+ years old) continue using tobacco each day.

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Kaswar Klasra

Kaswar Klasra

Kaswar Klasra is well Pakistani journalist with twelve years of experience of working for world’s leading publications. His worked has been published by news publications like Japanese monthly magazine FACTA, The Nation (Pakistan), News of The World ( London) , Los Angles Times ( USA), India Today, Brunei Times, Newsmax ( USA) , The Mirror ( UK), Daily Mail ( UK) , Progressive radio, Axel Springer, Mail Today ( India), Mumbai Mirror and The Journal of Turkish weekly. He can be reached at : kaswarklasra@yahoo.com
His tweeter handle is : @kaswarklasra

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