KARACHI: The unprecedented tax hike proposed for tax-paying tobacco companies would effectively favour the illicit manufacturers of cigarette in Pakistan, a major cigarette company said on Wednesday.

“This will also lead to significant shortfalls in government revenue as the volumes will massively shift from the tax-paying sector to the ‘untaxed’ sector as often seen in the past,” a spokesperson for the Philip Morris Pakistan Limited (PMPL) said.

During the period 2019-2021, the FED increase was to the tune of 26 percent. In the current fiscal year (2022-23), FED on cigarettes has already been increased by 25 percent.

The announcement on Wednesday by the federal finance minister that an increase in FED on cigarettes of over 150 percent is being proposed, if approved would lead to a price impact of more than 250 percent for consumers, as compared to the first quarter of 2022.

Copyright Business Recorder, 2023