Pakistan Cabinet has approved a flat tax on soft drinks and cigarette packets to boost a gaping budget deficit and reduce tobacco consumption, reports source.
It took the decision in May, which is expected to be enforced after the Parliament approves 2019-2020 financial budget, due to be declared in the Parliament.
A healthy tax of Rs. 10 on tobacco for 20 cigarettes packet and Rs. 1 for every 250 ml soft drinks will be imposed, reads the document from the Cabinet.
It continued, “The revenue generated through this health tax will be earmarked for the health sector development over and above its routine budgetary allocation.”
Pakistan Government has evaluated that tobacco kills over thousands of people every year. A government survey of 2014 found that nearly 24 million people or 19% of the total population, intakes tobacco.
Cost of Cigarette in Pakistan are comparatively low to the rest of the world, which underscore health risk.
Tobacco has been a big source of income for the previous government, which continued prices of tobacco low to maximise tax returns.
In 2018, Pakistan Health Minister has suggested Rs. 44 flat tax on every packet of 20 cigarettes, but the existing government has instead cut prices on low priced packets to stop imitation.
Amid controversy that the new tax increase might reduce cigarette sale and encourage counterfeits, claims Pakistan government’s focal man on tobacco control, Babar Atta.
He tweets, “A health tax is being imposed on 100% of cigarette packs regardless of brand,” adding that the government was the first one to take on the manufacturers.
Babar Atta also estimated that the flat tax will generate over 50 billion ($337.84 million), which they planned to spend on the health sector.