The Federal Board of Revenue (FBR) has refuted the rumors and news pertaining to the imposition of a health tax on the consumption of tobacco generally and cigarettes particularly.
The revenue authority issued a clarification about the imposition of health levy on tobacco consumption stating that health is a provincial subject as the federation cannot levy a health tax on tobacco consumption as per legal and constitutional experts.
As a result, it was decided to enhance the federal excise duty on cigarettes in order to discourage smoking. The parliament, through Finance Act 2019, abolished a three-tiered tax structure on cigarettes and also enhanced the FED significantly.
In the budget speech of 2019-20, the former revenue minister had clarified that the federal share of Federal Excise & Duty realized from the tobacco sector would be preferably allocated to the Ministry of National Health Services Regulations and Coordination. Resultantly, the issue of a health levy stands resolved. The information contained in the news item is incomplete, according to a statement issued by FBR.
Now it is up to the provincial government whether they introduce a health tax that can generate millions of rupees additionally for the provincial kitty. The prices of cigarettes have already seen an unusual increase in the past few years.