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Health levy not proposed despite cabinet decision

ISLAMABAD: Health advocates were shocked to learn on Tuesday that despite a decision of the federal cabinet to impose “health levy” on cigarettes and fizzy drinks, it was not included in the proposed budget for 2019-20.

“Though the levy was approved by the federal cabinet and Prime Minister Imran Khan is categorical about it, on Tuesday during a meeting held before the parliamentary session, the Federal Board of Revenue (FBR) came up with a proposal to drop the levy and withdraw a third tier of tax, on cigarettes, to increase revenue,” Special Assistant to the Prime Minister on National Health Services (NHS) Dr Zafar Mirza said while talking to Dawn.

On June 3 the federal cabinet had approved the health levy and directed the secretaries of finance, health and revenue divisions to implement it. As per a memorandum available with Dawn, the health levy of Rs10 on each packet of cigarettes and Re1 (one) on each bottle of 250ml fizzy drinks had to be imposed in the proposed budget. Moreover, it stated that revenue generated through the health levy would be earmarked for the health sector development.

Dr Mirza said that earlier there were three tiers of tax on cigarettes, but on FBR’s proposal the lowest tier of tax was withdrawn due to which tax or federal excise duty (FED) collected from the tobacco industry would be increased by Rs33 billion.

“The estimated revenue for the financial year 2018-19 is Rs114bn and, due to withdrawal of lower tier of tax, estimated revenue for year 2019-20 will be Rs147bn. I have got the assurance that the additional amount of FED i.e. Rs33bn would be diverted towards health sector,” he said.

World Health Organisation’s national professional officer Shahzad Alam Khan, while talking to Dawn, appreciated the government’s decision of withdrawing third tire of tax as it was demanded by his organisation.

“However I hope that Prime Minister Imran Khan would intervene and ensure that the decisions of federal capital are implemented,” he said.

Prime Minister’s Focal Person on Polio and Tobacco Babar bin Atta said that his role was to do advocacy for the health levy and he succeeded in getting the levy approved by the federal cabinet. He said that it was the job of the Ministry of Finance to implement the decision.

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