The cigarette remained the top revenue spinner of the federal excise duty (FED) during July-December, 2010-11, which contributed 1/3rd of the FED collection. The FBR analysis of the FED issued here on Thursday revealed that the collection from cigarettes recorded a modest growth of 6.1 per cent despite increase in retail prices due to upward adjustment in FED rates during Budget 2010-11.
The decline in the production of cigarettes by 4.4 per cent has affected the collection of FED from cigarettes. Similarly, the collection from services has declined by 31.8 per cent. One reason for this decline is the transfer of insurance and banking services from FED to sales tax. The collection of these items was included in the collection of FED in July, 2009 but started reporting in sales tax in August, 2009 and onwards.
A strong growth of 84.5 per cent has been recorded by natural gas during July-December, 2010-11. The major reason for this huge growth has been the enhancement of the rate of FED on natural gas from Rs 5.09 per MMBTU to Rs 10 per MMBTU during Budget 2010-11. The energy items of petroleum products like motor spirit, furnace oil, high speed diesel oil etc have been exempted from federal excise duty. However, a modest growth of 6.4 per cent has been reflected in the collection from petroleum products.
The FED collection from cement and beverages has reduced by 18.4 per cent and 17.3 per cent respectively during first half of the fiscal year 2010-11. The reason is decline in the production of these commodities by 10 per cent and 16.6 per cent, respectively during the period. As far as Special Excise Duty (SED) is concerned, it grew by 7.2 per cent to Rs 8.1 billion as compared to Rs 7.6 billion in the corresponding period last year, the FBR report said.