Cut in tobacco tax under consideration

Cut in tobacco tax under consideration

KARACHI: The government is considering to reduce the federal excise duty on cigarettes in order to discourage duty evasion and stop smuggling.

Sources said that proposals had been invited from stakeholders to rationalize the duty structure on tobacco industry.

The sources said that the authorities were considering to reduce the FED rate by 10 percent in the upcoming budget 2021/2022.

They said that a strong lobby was behind pressure for reduction in the rate for tobacco industry. It is learnt that the duty rate was proposed to cut because of large volume of smuggled cigarettes available in the market.

Interestingly, the health ministry had proposed to increase the levy in order to discourage the use of cigarettes.

The sources said that after the proposed reduction on the tobacco industry, the country would become having the lowest amount of taxes on the cigarettes use.

For the last two years the government was raising the duty rate on the tobacco industry. However, the stakeholders were demanding to reduce the rate in order to stop the smuggling.

The sources said that total revenue collection from tobacco industry was around Rs130 billion. Meanwhile, the tobacco industry assured that with the proposed reduction in duty the revenue would ultimately increase.

To some estimates, the country was losing around Rs77 billion due to smuggled cigarettes.

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