Cigarette Tax Hike in Sight: WHO's Persistent Urging of Pakistan
Increased Cigarette Tax: World Health Organization Urges Federal Board of Revenue to Boost Federal Excise Duty
In a bid to curb the burgeoning tobacco use, the World Health Organization (WHO) is putting pressure on Pakistan to increase the Federal Excise Duty (FED) on all cigarette brands. Sources close to the Business Recorder suggest that the Federal Board of Revenue (FBR) is feeling international heat to escalate the FED on cigarettes due to health issues.
The tax machinery is grappling with criticism over the drop in sales and volumes for two leading cigarette manufacturing companies, despite a 200% FED on this item. While the decrease in sales may seem comforting, it doesn't disregard the fact that smoking remains a health hazard and internationally, a minimum standard of taxes has been imposed on cigarette sales.
During a meeting of the National Assembly's Standing Committee on Finance, the Chairman of the FBR, Rashid Mahmood Langrial, acknowledged the need for stricter measures against the illicit cigarette trade in the country. He revealed that only one out of ten trucks of smuggled/illicit cigarettes are confiscated due to insufficient manpower, and the new powers to provinces could aid in checking illegal cigarettes at the retail level.
The FBR is working alongside provincial law enforcement agencies to crack down on illegal cigarettes. any cigarette lacking the mandatory stamp is considered illicit. The FBR is also devising a standing operating procedure (SOP) to enforce these measures effectively.
It's important to note that Pakistan ratified the WHO Framework Convention on Tobacco Control (WHO FCTC) in 2004, a move that underscored the significance of tobacco taxation in regulating tobacco use. The WHO advocates for tobacco taxes to constitute at least 75% of the retail price of tobacco products[2][4]. Current FED rates do not meet this standard, making cigarettes more affordable due to high inflation[1][2]. This, in turn, has raised concerns about a spike in smoking rates and health risks.
Organizations like SPARC and SPDC are advocating for an FED increase of Rs. 39 per pack for the 2025-26 budget. According to their cigarette tax simulation model, this move could generate an additional revenue of Rs. 67.4 billion and help reduce smoking rates[1][3]. This proposition aligns with the WHO's recommendations to drive up taxes as a deterrent for tobacco use and to foster better public health outcomes[4].
- The World Health Organization (WHO) is urging Pakistan to increase taxes on cigarettes in an effort to reduce tobacco use, considering the health hazards associated with smoking.
- The Federal Board of Revenue (FBR) in Pakistan is facing international pressure to escalate the Federal Excise Duty (FED) on cigarettes, given the health issues they present.
- During a meeting of the National Assembly's Standing Committee on Finance, the FBR Chairman acknowledged the need for stricter measures against the illicit cigarette trade, revealing that only one out of ten trucks of smuggled/illicit cigarettes are confiscated due to insufficient manpower.
- The FBR is working with provincial law enforcement agencies to crack down on illegal cigarettes, aiming to enforce these measures effectively through a standing operating procedure (SOP).
- Organizations like SPARC and SPDC are advocating for an increase in the FED by Rs. 39 per pack for the 2025-26 budget, which could generate an additional revenue of Rs. 67.4 billion and help reduce smoking rates, aligning with the WHO's recommendations for high tobacco taxes to foster better public health outcomes.
