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Wednesday, July 17, 2024

Quit smoking or pay taxes!

"The green leaf cess, which was previously decreased from Rs300 to Rs10 by the previous government, has been increased to Rs380."

During his press conference on Thursday, Federal Minister for Finance Miftah Ismail created panic among smokers as he said that the government would impose taxes to the tune of Rs36 billion on tobacco and cigarettes.

He stated, “The tax of Rs1,850 collected on cigarettes would now be Rs2,050, while Rs5,900 charged on Tier-1 cigarettes would be increased to Rs6,500.”

He also said about reversing the step taken by previous government regarding green leaf cess. He clearly announced, “the green leaf cess, which was previously decreased from Rs300 to Rs10 by the previous government, has been increased to Rs380.”

Moreover, Mr. Miftah shared his estimations, “the enhanced tax rate on cigarettes and tobacco processing will add Rs36 billion in totality. The government will bring additional Rs50 billion into the national kitty,” he said.

In recent past, there has been enough debate on the mechanism of taxation on cigarettes announced by the coalition government.

Contrary to Prime Minister Shahbaz Sharif’s instructions and the main coalition partner’s lobbying for increase in taxes on smoking, the government quietly gave billions of rupees in tax relief by increasing the taxable price threshold for the expensive cigarette brands.

Read more: Tax relief on cigarettes

Citizens greatly criticized this act claiming that a government that could not stand before the International Monetary Fund (IMF) to protect the salaried class from the additional tax burden changed the taxable price slabs to keep smoking affordable.

However, cigarette and tobacco are harmful for health and increase the cost of illness. Massively increasing taxes might discourage smokers.

As many as 31 million adults (age 15 +) or about one-fifth of the total adults currently use tobacco, according to Social Policy and Development Centre (SPDC). It added that tobacco use is the leading cause of death due to non- communicable diseases (NCDs), such as cancer, chronic respiratory diseases, and cardiovascular disease.

On the other hand, cigarettes and tobacco are addictive, thus their demand may not really be affected by increase in prices. Resultantly, tax revenue can be enhanced by the government.