Prices of cigarettes go up in twin cities

The prices of cigarettes have gone up after 10 percent increase in federal excise duty on various brands of cigarettes from June 13, 2009. Soon after the announcement made by the government in budget 2009-10 to increase excise duty shopkeepers increased the price of cigarettes.
While, giving the reason of the decision, the sources said that the rates have been increased to avoid black marketing by the retailers, who might withhold the stocks for raising prices at a later stage. Moreover sources said that the amendment has been made in the Second Schedule of the Federal Exerciser Act, however, this increase in the FED has been made from June 13 to avoid black marketing.
Subsequently the rates have also been increased passing the incidence of the excise duty to the general public. Sources further revealed that an increase in excise duty on the cigarettes in budget 2009-10 would result in massive tax evasion, illegal sale and smuggling of cigarettes depriving exchequer of billion of revenue collection.
At present, government is charging up to 63 percent excise duty on retail price of cigarettes in addition to 16 percent General Sales Tax (GST). While in the past, the practice of increasing excise duty and imposition of GST on cigarettes have led to massive tax evasion and government faced a loss of Rs 28 billion in revenue collection from cigarette industry due to tax evasion during the last four years.
However, market survey has shown that prices of various brands have been increased from Rs 4 to Rs 8 per pack. Sources were of the view that government had failed to control tax evasion and smuggling and now, as a desperate measure is likely to increase the duty on cigarettes.
According to sources, 20-25 cigarette companies are currently involved in producing substandard cigarettes located in cities like Okara, Sargodha, Bahawalnagar, Chakwal, Azad Kashmir and NWFP. These companies are using substandard tobacco in cigarettes and involved in activities like billion of rupees tax evasion and smuggling.
Sources regretted that the cigarette companies involved in making substandard cigarettes are paying only Rs 200 million tax annually. However, Federal Board of Revenue (FBR) had formed teams to raid these companies no implementation of plan has been observed yet due to negligence of tax authorities.