Tobacco industry proposes ‘modest hike’ in tax

ISLAMABAD: In a bid to control non-compliant cigarette manufacturers and resolve the issue of waning taxes, tobacco industry leaders have suggested the government to maintain its dual tier excise structure and implement a moderate excise increase of 10%.

In its budget proposal, the tobacco industry said that the current two tier specific tax regime is the optimal tax structure for the tobacco industry in Pakistan.



Industry experts assert that an effective enforcement strategy is needed against non-compliant cigarette manufacturers.

They highlighted that two leading registered companies contribute nearly 99% revenue to the national exchequer, while the remaining only have 0.7% share despite comprising 32% of the cigarette market.

Published in The Express Tribune, June 2^nd, 2016.

In March, a technical working group on tobacco taxation (TWGTT) of health ministry sought the removal of all exemptions given to Navy officials, the president of Pakistan, the Azad Jammu and Kashmir president, provincial governors and their families and guests in tobacco taxes in the next fiscal budget.



The TWGTT in its proposals recommended that from the next budget the finance ministry should increase the tax slab on all brands of cigarettes to Rs44 per 20-pack and Rs22 on 10-packs from the current Rs14.20 on 10-packs.

The TWGTT also recommended allocating two per cent of tobacco tax revenue to the Prime Minister’s National Health Programme for treatment of non-communicable diseases.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.