Home Global Village Cheaper brands of cigarettes to get a tax slap

Cheaper brands of cigarettes to get a tax slap

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The Peshawar High Court (PHC) has suspended the third slab of cigarette brands introduced by Federal Board of Revenue (FBR) to harbor the black trade of cigarettes in the market.

The High Court provided the interim relief to the petitioner. The petitioner pleaded before the court that Pakistan is the only country identified by the researchers where tax on the high sellable brands has been reduced by 33 percent against the World health Organization (WHO) Framework Convention on Tobacco Control.

The petitioner said the recent changes brought in the Federal Excise Act 2005 and implemented in the Finance Act 2017 resulted in the reduction in prices of brands instead of making them expensive.

The estimates of the World Health Organisation (WHO) suggest that almost half of the world’s 1.1 billion smokers live in Asia, with Indonesia and India having among the biggest populations of smokers, globally.

In Pakistan, cigarette excise duties have been applied in two tiers before 2017. The first tier was for the cigarette, which was expensive. The tax tier was based on the price of the cigarette; the brand with price more than Rs. 88 was paying Federal Excise Duty (FED) of Rs. 74 per pack, in second slab the brand less than Rs. 88 was paying Rs. 32.8 FED. In third slab, introduced by the government, the tax was reduced to Rs. 16 with the retail price below Rs. 58.5.

The petitioner pleaded in court that the government introduced restriction on lowering the price and shifting of the brand to another slab, but the restriction remained implemented on the first tier only, which included expensive cigarette brands such as Dunhill, Marlboro and Goldleaf, all of which cost more than Rs. 88 per pack. Since these cigarettes have a lower consumer base as compared to the third tier cigarettes, raising tax levies on these brands did not help resolve the problem.

Read more: Taxation on Cigarettes proposed at 75% does it make sense?

Advocate Babar Khan Yousafzai, talking to a publication, said that all multinational and local manufacturers of the cigarettes have been bared to sell the brands in third slab now until the petition is pending.

Recently, the advocates of smoke-free tobacco products from different Asian countries gathered for the first time ever in Jakarta, Indonesia, to call on their governments to allow and regulate the use of electronic cigarettes.

 He said the court has suspended the third slab from the day it was introduced, which covers nearly six months. “The national exchequer suffered around Rs. 30 billion loss due [to the] introduction of [the] third slab,” he said. Babar Khan said that government argued that the 3rd slab was introduced to control counterfeit tobacco trade in the market however it only benefited the tobacco industry. “The tax on cigarette brands was reduced to Rs. 16 from 34,” he said.

He said the government changed the structure of the finance act to launch the third slab, which was legally not allowed. Earlier, Ministry of National Health Services and Regulations (NHS) had recommended the finance ministry to increase FED on lower slab cigarette brands.

 The Minister for Health Saira Afzal Tarar had written separate letters to the ministry of finance and Special Assistant to Prime Minister on Revenue. The letters suggested implementing tax and pricing policies on tobacco products referring to the Framework Convention on Tobacco Control (FCTC).

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 According to the letter, increase of Rs. 44 per pack on 20 lower slab brands was suggested for the budget 2017-18. Spokesperson NHS Sajid Hussain Shah said that ministry had proposed taxation on cigarettes for the better health of people and discourage the tobacco consumption. He said that as the matter is sub-judice, no comments could be made.

Advocate Babar Khan Yousafzai, talking to a publication, said that all multinational and local manufacturers of the cigarettes have been bared to sell the brands in third slab now until the petition is pending.

 While Pakistan battles out its internal tax levies, the international community is calling it quits altogether in the face of the hazardous effects of combustible tobacco products consumption.

Recently, the advocates of smoke-free tobacco products from different Asian countries gathered for the first time ever in Jakarta, Indonesia, to call on their governments to allow and regulate the use of electronic cigarettes and ‘heat-not-burn’ tobacco products, which are considered far less harmful alternates to smoking. The event is regarded as a major headway towards smoke-free products.

The estimates of the World Health Organisation (WHO) suggest that almost half of the world’s 1.1 billion smokers live in Asia, with Indonesia and India having among the biggest populations of smokers, globally.

Read more: “Mahira’s Witch Hunt: A Battle between Morality & Modernity?”

Thousands die each day in these countries due to complications related to smoking such as heart diseases and cancer. According to some estimates, 100,000 people in Pakistan die of smoking annually (274 daily) and over 5,000 people are hospitalized every day due to tobacco-related diseases. Experts suggest that switching to non-combustible alternatives is a better option than continuing to smoke.


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