ISLAMABAD: The tobacco sector has been on the hit list for the government’s increasingly higher revenue collection needs, by paying higher taxes.
According to the details, the fresh massive strike of around 153 per cent Federal Excise Duty (FED) rates on cigarettes is going to cause around a 250 per cent increase in the prices of cigarettes, produced by legitimate companies.
Apart from the major hike in the prices of cigarettes, the supplementary finance bill, which was tabled in the parliament by finance minister Ishaq Dar, also suggests increasing the sales tax.
That coupled with the excise duty is more likely to boost the existing business of illicit cigarettes contributing nothing to the national exchequer.
It ought to be mentioned here that the Federal Board of Revenue (FBR), on Tuesday notified the FED increase on expensive brands from Rs6.5 per cigarette to Rs16.5 – an increase of 153%. For less expensive brands, the per stick increase is from Rs2.55 to Rs5.05 – an increase of 98%.
Currently, the legitimate sector holds 60 to 65% of the cigarette market share and pays more than 150 billion in taxes every year, while the illicit sector which holds 35 to 40% of the market share pays only Rs. 2 billion in taxes every year.
While Pakistanis have mixed views regarding the massive increase in the price of cigarettes.
Commenting on the development, The Pakistan Daily’s Editor Hamza Azhar Salam said, “Good decision by the government to increase taxes on cigarettes which are extremely harmful for health. Imagine how much more money we could make if we regulated & taxed Marijuana & Alcohol for a country of 200 million people which inevitably consume these unregulated products.”
