The Federal Board of Revenue has pressurised cigarette manufactures to increase price of this item on all brands for meeting the ambitious revenue target from the cigarette industry during 2009-10. Sources told Business Recorder here on Wednesday that cigarette is major contributor of excise duty to overall revenue collection.
The recent increase of Rs 2 per 20 pack of cigarettes is not due to increase in federal excise duty (FED) or sales tax on all brands of cigarettes. The FBR had given two options to the cigarette manufacturers to either increase the incidence of FED or raise the price of cigarettes. The companies have increased the price of cigarettes to contribute agreed amount of Federal Excise Duty and Sales Tax into the national kitty.
Resultantly, cigarette manufacturers have increased prices of all brands of cigarettes. This was done to collect the increase amount of duties and taxes from this sector as assigned by the FBR. However, sources confirmed that the FBR has not increased the FED or sales tax on this item.
The increase in price of cigarettes would help in collecting more amount of taxes from existing slabs of Federal Excise Duty charged from various brands of cigarettes. It seemed that the FBR is focusing on compliant taxpayers and documented sectors for improving revenue collection in stead of discovering potential taxpayers in the country.