ISLAMABAD: The Federal Board of Revenue (FBR) has estimated to collect around Rs200 billion from the tobacco industry by the end of 2022-23 after a major increase in the federal excise duty (FED) rates on cigarettes.
In the last fiscal year (2021-22), the tax collection from the tobacco industry stood at Rs 148 billion.
A new study titled, “Higher tobacco tax helps bring down sales of cigarettes in Pakistan,” revealed that out of 31 million adult tobacco users in Pakistan, one in every ninety-four smokers is forced to quit smoking due to an increase in cigarettes prices with higher tax and spend the savings to fulfil other needs like food, education and paying the utilities.
Cigarettes: FBR generates additional Rs11.3bn under FED
The research study further claimed the ground surveys in Islamabad, Rawalpindi, Lahore and Peshawar that smokers were forced to quit smoking after a significant raise in Federal Excise Duty (FED) ranging from 146 percent to 154 percent in February this year.
More than 31 million Pakistani adults (above 15 years) or about 19.7 percent of the total adults use some of tobacco which is one of the highest in the world.
The interviews with the smokers and data collected from these cities show that they are now saving the money by quitting smoking to fulfil other needs like food, education and health of their children, and paying the utilities, according to the study released by “Capital Calling”.
From a health point of view, the tobacco industry is causing a loss of around Rs620 billion to the national exchequer in terms of diseases like cancer, chronic respiratory diseases, and cardiovascular disease, besides causing 337,500 deaths every year.
The multinationals claim that share of the illicit cigarettes was recorded around 40 to 42 percent in the market, though the ground surveys suggested that the said number is not more than 18 percent. On the other hand, customs officials believed that the share of the smuggled cigarettes was significant which could be overcome easily through better border management.
The report accused multinational companies which cannot hide behind the excuse of illicit and illegal cigarettes and boost their profits by selling cheap cigarettes to Pakistani people.
The smuggling of international companies’ cigarettes in the local market remains a major concern to the federal authorities as this would largely remain out of the tax circle. The companies were trying to make up their loss in profit with increase in taxes on cigarettes through the sale of their smuggled brands at cheaper rates in the local Pakistani market, the study concluded.
Copyright Business Recorder, 2023
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