ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet may approve notification of minimum indicative prices (MIPs) for 2024 tobacco crop and revise cess rates for 2024-25.
Sources said that a summary to this effect was moved by the Ministry of National Food Security and Research to the ECC dated 7th December 2023 has recommended to the ECC for approval of MIP 2024 and cess rates for 2024-25.
The Ministry of National Food and Research in the proposal stated that Pakistan Tobacco Board (PTB) has been established mainly to regulate, control and promote the export of tobacco, tobacco products, as well as undertake research in tobacco and develop new tobacco growing areas.
As per the PTB Ordinance, the minimum indicative prices (MIP) for different grades of various types of tobacco are to be notified by the federal government.
The MIPs are recommended by the prices and grade revision committees (PGR) of the board on the basis of cost of production determined by the government committees under PTB bye-law.
Two committees (one for Khyber-Pakhtunkhwa and the other for Punjab) for the determination of the cost of price were constituted in pursuance of PTB bye-law. The cost of price committee for the Punjab finalised per kg cost price of DAC tobacco while the cost of production committee of Khyber-Pakhtunkhwa agreed upon cost for producing tobacco per hectare. However, consensus on cost of production per kg was not arrived due to disagreement of stakeholders on yield per hectare.
The price and grade revision committee finalised per kg cost of production and recommended the MIPs for various types of tobacco for different areas in its meetings held on 16th November 2023.
The ministry also stated that one of the functions of PTB, under PTB Ordinance 1968, is the collection of cess imposed on tobacco produced in Pakistan.
The Cess rates, not exceeding three per cent ad valorem, are to be notified by the federal government by notification in the official gazette. The Ministry in the proposal said to have added that the current Cess rates are required to be revised for the year 2023-24 in line with the increase in MIPs of all varieties of tobacco.
MIPs of various types of tobacco were notified by the federal government though SRO dated 29th December 2022, whereas, the current Cess rates were notified by the federal government through dated 11th August 2023.
The Ministry of National Food has recommended that the MIPs for 2024 and Cess rates for 2024-25 of tobacco crop for approval. The proposed MIP is Rs 505/kg for Flue Cured Virginia (FCV) Plain Area and Cess rate Rs15.15/kg and MIP for Sub-mountainous Area is Rs573 and Cess rate Rs15.15/kg.
The Ministry has proposed Rs378/kg MIP for Dar Air-Cured tobacco (DAC) MIP and Cess rate at Rs11.34/kg, White Pam (WP) MIP at Rs245/kg and Cess rate at Rs7.34/kg, Burley MIP at Rs295 per kg and Cess rate at Rs8.85 per kg, while MIP for Naswar/Snuff/ Hookah and other Rustica tobacco and its products at Rs 245 and Cess rate Rs7.35 per kg and MIP for Sun Cured Virginia (SCV) at Rs331 with Cess rate Rs9.93 per kg.
The proposal does not entail any financial obligation on the part of the federal government and the proposal contained in the summary is submitted for approval of the ECC of the federal cabinet.
Copyright Business Recorder, 2023
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