Secretary Ministry of National Health Services Naveed Kamran Baloch told Business Recorder that his ministry has done its work and now it is up to the Ministry of Finance and FBR whether they accept or reject is recommendations. He said that illicit trade of cigarettes could be curbed through effective policy implementation as this has nothing to do with the taxation.
The ministry officials said that introduction of tier-3 tax slab on the cigarettes has resulted in increase in consumption of the cigarettes and smoking in the country, besides increase in the mortality rate due to excessive smoking.
The ministry also recommended the Finance Ministry and FBR to implement only two tax slabs on the tobacco industry to increase the revenue and curb illicit trade in the country.
Talking to reporters, State Minister for Finance Rana Afzal Khan said the government has been seriously considering the issue of tax slabs on the cigarettes and a final decision in this regard would be taken in a couple of days.
He said that finance committee has also proposed for placing two slabs of taxes as the local industry wants to keep it in the lowest slab and international companies will remain in the higher slab.
The government has also taken special measures to curb smuggling of the cigarettes, he said, adding that a final decision on the proposal is expected soon. A pre-budget 2018-19 policy brief said that annual cigarette consumption in Pakistan is around 86.7 billion sticks (49 billion in 1997) while annual local production averages above 57 billion sticks.
With the increase in illicit trade, the estimated government's revenue loss from illicit trade had reached Rs62 billion in 2016 from Rs 27 billion in 2012 and this high figure of illicit trade was used by tobacco industry to strengthen its case for the introduction of 3rd tier FED structure. With introduction of 3rd tier, the prices of cigarettes dropped and consumption increased, it said.