Earmarking of Tax Revenue for Health Sector through Increased FED on Tobacco, Fizzy and Sugary Drinks Unprecedented: Dr. Zafar Mirza

Islamabad, July 06, 2019 (PPI-OT): In a statement issued today Special Assistant to Prime Minister on Health Dr. Zafar Mirza has termed the earmarking of additional tax revenue, collected through increase in Federal Excise Duty (FED) in Finance Act, 2019 to the health sector as unprecedented and historic. Terming the development as a big win for health of the people of Pakistan, Dr. Mirza recounted the intense efforts since his taking over as the State Minister of Health. Several rounds of discussions were held with Adviser on Finance Dr. Hafeez Sheikh, the Federal Minister for Revenue Hammad Azhar, Minister of Law Farough Naseem and Chairman FBR Shabbar Zaidi.

Under the direct and unequivocal instructions of the Prime Minister Imran Khan the team worked to find out the most viable solution. Finally, it was agreed that the enhancement of Federal Excise Duty on cigarettes, fizzy drinks and sugary drinks would be considered as a health levy and the revenue generated will be earmarked for health sector, added Dr. Zafar Mirza. Eventually, Minister of State Hammad Azhar (now Federal Minister) stated in clear terms during his budget speech that the additional revenue collected through enhanced Federal Excise Duty would be earmarked to the health sector therefore there should be no ambiguity on this count, stated Dr. Zafar Mirza.

The budget proposals are comprised of both the Budget document and budget speech made by the Finance Minister on the floor of the National Assembly elaborated the SAPM on Health. Pakistan Tehreek-i-Insaf in its election manifesto had pledged to the people of Pakistan that health budget would be doubled by the year 2020. With the enhanced revenue in the Finance Act 2019 being earmarked to health, there will be even greater increase in health budget which is a landmark achievement of the current Government under the leadership of Prime Minister Imran Khan, said Dr. Zafar Mirza.

He said the measure would have far reaching impact and is reflective of our resolve as a nation to accord high priority to health sector over any other consideration. It is a WIN-WIN situation with respect to health-reduce consumption of tobacco, fizzy and sugary drinks and enhanced revenue from additional taxes. In the Finance Act, 2019, minimum FED on lower tier of cigarette packs of 20 cigarettes has been increased from Rs. 25 to Rs. 33, and on upper tier has also been increased from Rs. 90 to Rs. 104. The additional tax revenue will be earmarked for health sector, over and above the already allocated resource.

Dr Zafar also welcomed the abolishment of third tier of cigarettes for taxation purposes which had resulted in lowering of revenues on tobacco. Tobacco is the biggest killer causing death of around 160,189 persons in Pakistan every year. Almost 15.6 million adults currently smoke tobacco in the country whereas around 1200 Pakistani children between age of 6 and 15 start smoking every day.

Moreover, the economic cost of smoking amounts to 143.208 billion rupees. This includes direct costs related to healthcare expenditures and indirect costs related to lost productivity due to early mortality and morbidity whereas consumption of fizzy and sugary drinks are contributing to the rise in Non-Communicable diseases in the country.

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