ECC orders health ministry to resubmit case on health tax

ISLAMABAD: The Economic Coordination Committee (ECC) has directed the ministry of National Health Services, Regulation and Coordination to resubmit a case with regard to the imposition of health levy on tobacco and sugar sweetened Beverages before the next budget.

Sources said that ECC meeting held during last week of October considered the summary regarding “Allocation of Health contribution from revenue generated on account of Health Hazard Tax on Tobacco and Sugar Sweetened Beverages (SSBS) and directed the Ministry to resubmit the case at the time of next budget for consideration/approval.

It is pertinent to note that the Ministry of Health had proposed the ECC to impose a health tax Rs10 pack of 20 cigarettes and Rs1 per 250ml of sugar sweetened beverages.

It had also asked to introduce a federal health contribution bill, 2021, to consolidate the law relating to the imposition, collection of the tax on the sale and consumption of certain goods which are harmful to society and individuals. However, the proposal was deferred on the recommendation of the subcommittee of ECC.

Sources said that FBR had pressed for the imposition of the tax, informing that additional revenue on account of increase in FED on cigarettes and carbonated, sugar-sweetened beverages during the financial year 2019-20 (FY20) totaled Rs33 billion while the law division advised that the tax can be introduced as an ordinary bill or be promulgated through an ordinance before tabling the bill in the parliament.

It is worth mentioning here that Non-Communicable Diseases (NCDs), including heart diseases, stroke, cancer, diabetes and chronic lung diseases are collectively responsible for almost 68 per cent of deaths in Pakistan. Similarly, NCDs cause 51pc of total diseases mostly in the youth of the country.

Furthermore, Pakistan is obligated to achieve the targets set in the Sustainable Development Goals (SDGs) under which it has to reduce one-third of premature mortality due to NCDs by 2030.

Raising taxes on tobacco and other harmful products have long been a dependable and significant revenue source in many countries. More recently, considerable attention has been paid to the way in which such taxes may also be used to attain public health objectives by reducing the consumption of products with adverse health and social impacts.

Moreover, explicitly earmarking excise taxes on tobacco and other such products to finance public health expenditures will make increasing such taxes politically acceptable and provide the funding needed to increase expenditures, especially for the poor.

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