FBR turned down health ministry’s proposal to increase cigarettes prices

ISLAMABAD: The Federal Board of Revenue (FBR) straightaway rejected the Ministry of National Health Regulation Authority’s proposal’ to soar the cigarettes price by Rs44 per packet, and increased Federal Excise duty (FED) on cigarettes instead.

“In exercise of the powers conferred by clauses (B) of sub-section (3) of section 3 of the Federal Excise Act, 2005, the Federal Board of Revenue (FBR) is pleased to direct that the excise duty shall be levied and collected on fixed basis at the rates specified”, the document stated.

For locally produced cigarettes with retail prices exceeding Rs4,500 per thousand cigarettes, the tax will charge be charged at Rs3,964. In addition to this, if locally produced cigarettes with printed price exceed Rs2,925 per thousand cigarettes, but does not exceed Rs4,500 per thousand cigarettes, the tax will be collected at Rs1,770.

In tier 3 of locally produced cigarettes, if their retail price does not exceed Rs2,925 per thousand cigarettes, Rs840 will be collected in taxes.

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It is worth mentioning here that government has announced to increase the FED on cigarettes in Finance Bill 2018-19 subsequently it had issued the notification within three days of the announcement of the federal budget.

Normally, the FBR issues the notification after the approval of budget from the Parliament. On this, the spokesperson of FBR, while talking to Pakistan Today, stated that we have the power to issue a notification, and the department will now collect more taxes from the cigarettes industry.

The Ministry of Health had given the budget proposal to the tax department to increase the cigarettes price by Rs44 per packet as the domestic industry had to bear the loss of Rs40 billion due to the new slabs introduced by the FBR.

The number of smokers in the country has increased with the introduction of tier 1, tier 2 and tier 3 systems, thus the cases of cancer are increasing with the passage of time.

One official told that FBR has only received Rs2 billion under the new tier 3 system. The FBR has imposed Rs10 as health tax on the purchase of tobacco in addition to this. Resultantly, a surge of 71 per cent increase in cigarette production has been reported from July 2017 to November 2017.

It is pertinent to mention here that FBR had introduced the tier system in last year budget and according to chairman FBR, the department has collected Rs 96 billion during the first ten months of the ongoing fiscal year. “We will get more tax under the announced tier1, tier2 and tier3 system, he added.

 

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