To reduce consumption and increase revenues, Uniform & high Tobacco tax urged

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By: Our Correspondent

Islamabad: The new two-tier structure of federal excise duty (FED) on cigarettes will help reduce tobacco consumption in the country. Speakers at a seminar in Islamabad, lauded the Federal Government for changing the three-tier into two-tier FED system with enhanced consumer prices of all leading brands of cigarettes, they urged government to abolish the tier-based FED structure and introduction of a single, high, uniform tax be applied to all types of cigarettes.

Social Policy and Development Centre (SPDC) organized a policy dialogue on “Revenue impact of changes in Federal Excise Duty on Cigarettes – Budget 2019-20″ at a Hotel in Islamabad.  

The speakers said that two-tier structure of federal excise duty (FED) on cigarettes introduced in the Budget 2019-20 is expected to lead to a significant reduction in tobacco use and enhanced revenue for government exchequer.

They further added that in the budget 2019-20, the three-tier FED structure was changed into a two-tier system with enhanced tax rates for both low-price and high-price cigarettes. Consequently, consumer prices of all leading brands of cigarettes were increased. However, it is important to observe that increase in the consumer prices is not merely due to enhanced tax rates but the net-of-tax prices were also increased by the manufacturers.

The participants of policy dialogue said that high tobacco taxes can play an instrumental role in curbing tobacco use in the country. Therefore, the next step for government should be to abolish the tier-based FED structure and introduction of a single, high, uniform tax be applied to all types of cigarettes, which would not only help curb tobacco use in the country but would also contribute in generating more revenues that can be used for promoting public health.