ISLAMABAD: The World Bank (WB) has strongly recommended higher rates of the federal excise duty (FED) on all brands of cigarettes.

The World Bank’s latest report-Pakistan Development Update (PDU) said that a substantial revenue gain of 0.4 percent of the gross domestic product (GDP) could be achieved if the current rate on premium cigarettes (Rs16.50 per cigarette) was also applied to standard cigarettes.

The report said the FED collection on cigarettes lied below its potential Pakistan collected 0.5 percent of GDP in FED revenue in fiscal year 2021-22. The taxation of cigarettes was the main contributor to this and accounted for 0.19 percent of GDP, which has remained relatively steady in recent years.

A substantial revenue gain of 0.4 percent of GDP could be achieved if the current rate on premium cigarettes (Rs16.50 per cigarette) was also applied to standard cigarettes, the report added.

Copyright Business Recorder, 2023