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ISLAMABAD: The third tier of excise duty on cigarette price is likely to be withdrawn in the upcoming federal budget as proposed by the National Assembly’s Standing Committee on Finance.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