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  • Govt imposes Rs36 billion additional tax on cigarettes, tobacco processing to revive IMF programme

    Govt imposes Rs36 billion additional tax on cigarettes, tobacco processing to revive IMF programme

    The government has issued an ordinance to impose an additional Rs36 billion tax on cigarettes, an additional Rs2 billion tax on the processing of tobacco, and lowered charges on transportation vehicles in order to raise an additional Rs38 billion in taxes.

    According to Geo, tier-1 brand cigarettes may see a price increase of Rs20 to Rs30 each packet, while tier-2 brand cigarettes would see a price increase of Rs10 per packet.

    The government increased the advance federal excise duty (FED) tax on tobacco processing from Rs10 per kg to Rs390 per kg, which will be adjustable.

    In order to secure the restart of a stalled programme and the release of a $1.17 billion tranche under an expanded $7 billion extended fund facility (EFF), Pakistan has moved to impose taxes on cigarettes and tobacco processing just prior to the International Monetary Fund’s (IMF) executive board meeting, which is scheduled to take place in Washington on August 29.

    The government did not apply regulatory duties on luxury goods because they will be imposed through SRO after receiving tariff board approval and perhaps receiving ECC approval.

    The FBR expects to raise between Rs5 and Rs14 billion in tax income through RDs, hence the overall revenue impact could reach between Rs50 and Rs52 billion.

    It appears strange that the government did not implement any taxation measures on the production of sugar-filled beverages, which also harms the health sector.

    According to the ordinance, retailers who do not fall under tier-1 will be charged the tax through their monthly electricity bills at a rate of 5 per cent where the amount of the bill does not exceed Rs20,000 and at a rate of 7.5 per cent where the amount is greater. The electricity supplier will deposit the money that is thus collected directly without deducting it from his input tax.

    Through this move, the government hopes to raise Rs2 billion.

    In contrast, the FED on locally produced cigarettes has increased from Rs5,900/1,000 sticks to Rs6,500/1,000 sticks for tier-1 and from Rs1,850/1,000 sticks to Rs2,050/1,000 sticks for tier-2 cigarettes. The FED on un processed tobacco has increased from Rs10 per kg to Rs390 per kg.

  • Pakistan faces Rs615 billion annual deficit due to tobacco consumption

    Pakistan faces Rs615 billion annual deficit due to tobacco consumption

    Pakistan has a substantial Rs615 billion annual deficit owing to diseases caused by smoking and overall tobacco usage, with only Rs120 billion earning in tax revenue from the product.

    The government is expected to improve revenue by raising the tax on cigarettes by 30 per cent according to The Nation.

    This was voiced by speakers at a major symposium held in Islamabad on May 18. The Pakistan National Heart Association (PANAH) held a seminar on the theme ‘Harms of Tobacco Products and the Importance of Tax Policy,’ which was presided over by Patron General (R) Ashraf Khan and hosted by General Secretary Sana Ullah Ghumman.

    As per the speakers at the event, tobacco usage is a major cause of serious heart, lung, and cancer diseases in the country. A fact sheet on the health and economic costs of cigarette usage was released by the Social Policy and Development Centre (SPDC).

    According to the survey, tobacco is used by 31 million persons over the age of 15. More than 260,000 people are predicted to start smoking in the country if tobacco taxes are not raised in the budget for 2022-23.

    Engineer Iqbal Zafar Jhagra, the former governor of KP and a senior PML-N leader, was the special guest at the event. Nisar Cheema, a member of the National Assembly, was also present.

    Read more: Tobacco companies in Pakistan may bump cigarette prices

    PANAH Patron General (R) Ashraf Khan congratulated the attendees and informed them of the organization’s goals and objectives.

    Smoking was declared the primary cause of deaths from non-communicable diseases (NCDs) such as heart, cancer, respiratory, and chronic diseases, according to participants, with an estimated 163,360 persons dying in 2017.

  • Tobacco companies in Pakistan may bump cigarette prices

    Tobacco companies in Pakistan may bump cigarette prices

    Farmers have asked the government and firms to increase the price of future tobacco products in accordance with the current price hikes in pesticides, fertilisers, and other crop preparation and selling charges.

    On May 9, the demand was made at a meeting of Ittehad-e-Kashtkaran in Khyber Pakhtunkhwa. The participants agreed that the government should reduce agricultural inputs because pesticide, fertiliser, and other costs have risen dramatically.

    Attendees suggested that the price of tobacco be set at Rs350 per kilogramme so that growers may meet the current price increases in pesticides, fertilisers, and other expenses spent during crop preparation and marketing.

    The newly elected officials also encouraged the government to create favourable local marketplaces for agricultural products to aid hardworking farmers. They demanded that the government and tobacco businesses pay the farmers’ outstanding debts immediately.

    Read more: Open market: Lemon being sold at Rs1,100 per kg in Lahore

    Growers also asked the government to develop a policy to prevent tobacco-related industries from moving from Khyber Pakhtunkhwa to Azad Kashmir and other provinces.

    It should be noted that tobacco is grown in Pakistan, with Khyber Pakhtunkhwa accounting for 80 per cent of total production.

    Tobacco products also give Rs135 billion to the federal budget, while the tobacco development tax contributes Rs980 million to the provincial budget.