Cigarettes prices could rise, as govt mulls raising taxes


ISLAMABAD: The government is contemplating to increase the tax on cigarettes in the upcoming budget for the financial year 2018-19 set to be presented on the 27th of April.

Following the recommendation of Ministry of Health to raise taxes on cigarettes in FY 2018-19 budget, the government is planning to abolish the incentive of lower tax extended in outgoing FY 2017-18 to increase revenue and reduce health risks, reported Express Tribune.

Finance Division realized it had committed an error by decreasing the excise duty on cigarettes in outgoing FY 2017-18 and is now seeking to discontinue this incentive, said sources.

They disclosed State Minister for Finance Rana Muhammad Afzal instructed Federal Board of Revenue (FBR) officials to discontinue the third-tier of cigarette prices in coming FY 2018-19 budget as its inclusion had caused immense losses to the public exchequer.

Mr. Afzal highlighted the government is required to meet its undertaking to the World Health Organization (WHO) aside introducing measures to guarantee improved health for its citizens.

Ministry of Health forwarded a letter to the tax regulator highlighting before FY 2017-18 budget, it recommended a Rs44 tax per pack on a lower slab of all cigarettes brands to address health problems and raise revenues.

A study ascertained levying a uniform excise duty of Rs44 per pack of 20 cigarettes will aid in decreasing the no. of smokers by 13.2 percent and raise tax revenues by Rs39.5 billion.

Also, levying this uniform excise duty of Rs44 per pack would contribute in decreasing deaths caused by smoking by around 0.65 million and avert 2.55 million young people from the menace of smoking.

But last year the recommendation from the Ministry of Health was cast aside and the Finance Act 2017 brought in a new tax which brought down excise duty of Rs16 per pack, contributing to the rise in its production but decreased the revenue collection for FBR.