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Cabinet approves flat tax on cigarettes

11 Jun 2019. Pakistan’s cabinet has approved a flat tax on all cigarette packs in order to plug a budget deficit and discourage tobacco consumption, Reuters reported.

At the end of May, the cabinet made the decision, which is expected to be implemented after the parliament approved the 2019/2020 fiscal budget, due to be announced in parliament on 11 June. A health tax of INR 10 (EUR 0.12) for a pack of 20 cigarettes will be levied, the document from the cabinet division said. “The revenue generated through this health tax will be earmarked for the health sector development over and above its routine budgetary allocation,” it said.

According to the report, the government estimates that tobacco kills more than 100,000 people annually. A government survey in 2014 showed that around 24 million adults or 19 per cent of the population aged 15 and over, consumed tobacco.

The government’s focal person on tobacco control, Babar Atta, estimates the tax will generate around INR 50 billion (EUR 635 million), which the government plans to spend on the health sector, the report said.