ISLAMABAD: Cigarette manufacturers on Monday asked the government to substantially increase adva­nce tax on processed toba­cco from Rs10 to Rs300 per kg to discourage sales by unregistered cigarette brands.

In their budget proposals to the Federal Board of Revenue (FBR), the three main tobacco companies asked the government to increase advance tax on processed tobacco, which is the key raw material for cigarette manufacturing.

At a media briefing, Senior Regulatory Affairs Manager Pakistan Tobacco Company Noor Aftab, said the share of illicit cigarettes has increased to 40 per cent in Pakistan as per surveys and research studies by international organisations.

“This is alarming as the illicit cigarette makers are evading taxes and there is no quality check on the contents of these cigarettes, which was very harmful for consumers,” Mr Aftab said.

He added that the regulated industry has suggested that the government can enhance its revenues and help reduce health risks for smokers by bringing the illicit industry under the net.

The budget proposals called upon the FBR to implement a Rs300 per kg AT at Green Leaf Threshing (GLT) units. There are 11 GLT units across Pakistan.

As per the Finance Act 2019, adva­nce tax was imple­mented at Rs10 per kg on tobacco purchases in 2018-2019 and was increased to Rs300 per kg as a result. The cost of tobacco purchases by illegal cigarette makers increased many folds.

“However, the illicit cigarette manufacturers lobby got it reversed to Rs10 per kg last year, which facilitated the unbranded and illegally operating cigarette making units,” Mr Aftab said.

The industry has contributed the highest-ever revenue during the last two years, which increased from Rs117 billion in 2019-20 to Rs134bn in 2020-21.

Published in Dawn, May 31st, 2022