The imposition of high taxes on cigarettes inadvertently promotes the rise of illicit cigarette trade in Pakistan, sparking concerns about the government’s strategy to protect public health through increased taxation.
(more…)Tag: tobacco
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Philip Morris expresses concerns over surging illegal cigarette market in Pakistan
Islamabad, May 25, 2023: Pakistan’s documented tobacco sector is grappling with a substantial decline in sales, resulting in billions of rupees in losses for the national exchequer.
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Citizens Health Initiative highlights threat of illegal cigarette sales, calls for action
Karachi, May 23, 2023 – Citizens Health Initiative (CHI), a public health organization, has responded to the misleading campaign by anti-tobacco organizations that undermines the volume and impact of illicit cigarettes.
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Experts advocate for higher duties, taxes on cigarettes for healthy Pakistan
In a bid to ensure a healthier Pakistan, health experts are calling on the government to impose increased duties and taxes on cigarettes.
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OICCI proposes harsh penalties for selling cigarettes below MLP
In anticipation of the upcoming federal budget, foreign investors operating in Pakistan, through the Overseas Investors Chambers of Commerce and Industry (OICCI), have submitted specific proposals pertaining to the tobacco industry to the Federal Board of Revenue (FBR).
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Pakistan’s tobacco industry faces challenges amidst excise increases and duty evasion
In February 2023, Pakistan’s Finance (Supplementary) Bill 2023 introduced a significant excise increase for the tobacco industry, resulting in the highest-ever excise duty on tier-1 and tier-2 cigarette brands.
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FBR’s revenue collection from cigarette sales falls short of expectations despite FED hike
The Federal Board of Revenue (FBR) did not meet its revenue collection target from cigarette sales in April 2023, despite the sharp increase in Federal Excise Duty (FED) on the tobacco industry through the mini-budget in February this year.
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FBR revokes notification on massive increase in FED on cigarettes
On May 2, 2023, the Federal Board of Revenue (FBR) in Pakistan revoked its earlier notification SRO 178(I)/2023, which had massively increased federal excise duty (FED) rates on cigarettes.
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Pakistan Tobacco announces 38% surge in quarterly profit despite tax hikes
Despite a significant hike in taxes, Pakistan Tobacco Company announced a 38% surge in quarterly profit after tax on Tuesday.
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Prevalence of NDP cigarettes hampers Pakistan efforts to curb smoking
The Pakistani government’s attempts to reduce cigarette consumption by increasing the tobacco tax rate have been unsuccessful, as the prevalence of cheaper non-duty-paid (NDP) cigarettes in the market has led to continued consumption of illegal cigarettes.
As a result, an estimated 32.6 billion illegal cigarettes are consumed out of a total consumption rate of 80 billion, making it challenging for the government to control the overall consumption rate.
Recent regional data indicates that Pakistan has one of the least affordable cigarette markets among South Asian and WHO Eastern Mediterranean Region (EMR) countries, and its affordability has worsened significantly over the past three years. This has resulted in down trading, but the number of cigarette consumers continues to rise.
In 2023, Pakistan ranks fourth in terms of the least affordable cigarette market among the 15 WHO EMR countries, and third among the six South Asian countries. Moreover, cigarette affordability in Pakistan has worsened the second most among the 15 WHO EMR countries and the most among the six South Asian countries during the period 2020-23.
These statistics challenge the claim made by anti-tobacco organizations that increasing taxes on cigarettes would make smoking less affordable and reduce consumption.
Moreover, increasing the tax rate on tobacco may worsen the affordability of cigarettes and lead to unintended consequences such as an increase in illicit trade. Current statistics show that illegal cigarette brands benefit from the price difference due to tax evasion, while the legal industry bears the burden of increased taxes on cigarettes. It is expected that the market share of illegal cigarettes will reach 50%.
Illicit tobacco trade results in tax evasion of more than Rs. 80 billion annually. This amount could be utilized to address budget deficits and improve the welfare of people affected by inflation. Therefore, it is vital that the government takes effective measures to curb the illicit tobacco trade and bring it into the documented sector, ensuring the proper collection of taxes and the provision of resources for the betterment of society.
Cigarette retailers demand tax reversal to prevent job losses