Karachi, July 1, 2024 – In a significant move aimed at regulating the tobacco industry, the Finance Bill, 2024 has proposed an increase in the retail price for different tiers of cigarettes manufactured in Pakistan.
This proposal includes a restructuring of the duty rates for locally produced cigarettes, ensuring that brands are retained within their respective tiers despite the price hike. The proposed changes are as follows:
1. High-Priced Cigarettes: For locally produced cigarettes with an on-pack printed retail price exceeding Rs 12,500 per 1,000 cigarettes, the rate of duty will be Rs 16,500 per 1,000 cigarettes. This is an increase from the previous threshold of Rs 9,000 per 1,000 cigarettes.
2. Low-Priced Cigarettes: For locally produced cigarettes with an on-pack printed retail price not exceeding Rs 12,500 per 1,000 cigarettes, the rate of duty will be Rs 5,050 per 1,000 cigarettes. Previously, this applied to cigarettes priced up to Rs 9,000 per 1,000 cigarettes.
Additionally, the Finance Bill 2024 has introduced a reduction in the minimum price restriction. Through the Finance Act 2024, the minimum price restriction has been reduced from 60% of the retail price to 55%.
This change is particularly relevant for cigarettes falling under the high-priced category, as outlined in Serial No. 9 of the proposed duty structure.
These measures are part of a broader strategy to regulate the tobacco industry, control consumption, and increase revenue from tobacco sales. By raising the federal excise duty (FED) rates and adjusting the price thresholds, the Finance Bill aims to discourage excessive smoking, especially among the youth and low-income groups, while simultaneously boosting government revenue.
The restructuring of the duty rates and the adjustment of the minimum price restriction reflect the government’s commitment to public health and economic stability. This approach balances the need to control tobacco consumption with the necessity of maintaining a steady flow of revenue from one of the country’s significant tax contributors.
Overall, the proposed changes are expected to have a substantial impact on the tobacco market in Pakistan, influencing both consumer behavior and industry practices. As these measures take effect, it will be crucial to monitor their outcomes to ensure they achieve the desired public health and economic objectives.