Fozia Azam

The Health Levy Bill, which has been put on the backburner since it got the cabinet’s nod in 2019, can help generate Rs60 billion worth of additional taxes annually if approved by the parliament and enforced in letter and spirit. The revenue generated thus will help not only reduce the damage caused by the tobacco use but will also enable Pakistan to improve its healthcare infrastructure.

The bill was approved back in 2019 for presentation before the parliament to make it into a law to discourage tobacco use and generate income that can be added to the country’s revenue and boost the economy. At present, the tobacco industry is considered to be the largest tax-paying business in the country. Still, its contribution to the national exchequer is far less than it should be. According to Pakistan Institute of Development Economics, tobacco consumption has a health burden of Rs615 billion, 1.6% of GDP, compared to a mere Rs115 billion in revenue from tobacco taxation.

In 2019, the federal cabinet approved the Health Levy Bill, which seeks to impose a Rs10 levy on each packet of cigarette produced. However, the delay in getting the final nod from the parliament is resulting in a loss of Rs60 billion annually.

Dr Ziauddin Islam, the former technical head of the Tobacco Control Cell in the Ministry of Health, told WealthPK that the revenue generated so would be directly deposited to the health ministry by the Federal Board of Revenue, thus helping the health ministry to utilise the amount on various health projects to improve the health condition of people. “The health burden on the country’s economy caused by diseases due to tobacco use can be addressed to some extent,” he added.

He said when a product was causing this much health loss, a levy must be implemented on it. Ziauddin Islam recalled that said Pakistan moved in that direction in 2019 by drafting a Tobacco Health Levy Bill, but it had not seen the light of the day due to continuous interference of tobacco industry Health experts believe that the projects initiated by using the amount collected through this bill from tobacco industry will help ease Pakistan’s current economic crisis.

It is worth mentioning here that Health Levy Bill was meant to discourage tobacco use and also to utilise the revenue generated to improve Pakistan’s healthcare system. One of the Sustainable Development Goals (SDGs), which Pakistan has committed to implement, calls for preventing the one-third of premature deaths caused by tobacco by 2030.

Health experts believe that it is the need of the hour to impose further health taxes on tobacco use to achieve the SDG target, besides discouraging tobacco use among youth. It is important to mention that Federal Excise Duty on tobacco has been enhanced to Rs16,500 per 1,000 cigarettes from the existing Rs6,500 per 1,000 sticks – an increase of Rs10,000 or 153%.

FED on each cigarette has been increased from Rs6.5 to Rs16.50 for expensive brands. The minimum price cap for the expensive brands has also been increased from Rs6,600 to above Rs9,000 per 1,000 sticks. Similarly, for the less expensive brands, the tax has been increased to Rs5,050 per 1,000 cigarettes from Rs2,550.

Credit: Independent News Pakistan-WealthPk