The production of domestic cigarettes in the first eight months of the current fiscal year has dropped 14 per cent, compared with the corresponding period of the preceding year, according to a report of the Federal Board of Revenue.
The continued increase in prices of cigarettes has decreased market demand, resulting in lower production. High prices have also increased the number of substandard cigarette brands in the market and people have switched from quality brands to the cheaper substandard brands.
Sources claim that production will drop by almost 18 per cent by the end of fiscal 2011, due to the current economic conditions of the country.
As a result of the drop in sales and production, the government’s federal excise duty target was not achieved in the previous fiscal year and the same is expected this year.
Cigarettes are the primary source of federal excise duty for the Federal Board of Revenue that contributed 30 per cent of the total duty collection in fiscal 2010.
Published in The Express Tribune, March 12th, 2011.
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