ISLAMABAD, June 5: The government is likely to seek increase in cigarettes prices to enhance revenue collection from this source, reliable sources told Dawn.

The government may seek increase in cigarettes prices through multinational companies who constitute all most 95 per cent cigarettes manufacturing activity in the country.

The sources said that it was likely that the decision to be announced in the budget of 2002-03 or some time later.

Defending the price increase of cigarettes, the sources said that as Central Excise Duty (CED) is levied at retail price, therefore, any increase in price be translated into revenue collection.

Elaborating further, the sources said that the CBR was contemplating to seek the decision on the grounds that instead of tinkering with the price slabs or duty structure in the past, which could not yield the desired revenue growth, the cigarettes prices should be increased to achieve the raise in revenue.

The sources said that the proposal was under consideration following the low collection made from this head against the one assured by the multinationals during the last year budget.

The multinationals Lakson Tobacco Company and Pakistan Tobacco Company have not assured the required increase in revenue despite of budgetary measures and revision of duty slabs in September last year, said the sources.

The revenue raised from the cigarettes during the 10 months of the current financial year stood at Rs11.06 billion against Rs12.05 billion during the same period last year, registering a decline of 8.21 per cent.

The government has projected Rs17 billion to be collected from this head during the current fiscal, which after 9/11 incident was reduced downward to Rs15 billion, but the sources said that again it would be hardly around Rs12 billion by the end of current financial year.

On the other hand, Lakson Tobacco Company has also reportedly sought increase in duty slab on the category A cigarettes that was top of the line brand as it did not produce any cigarettes of this brand, which was being produced by major manufacturing multinationals.

The sources said that the CBR was also taking tough measures for curbing the menace of counterfeiting and fake cigarettes.

This resulted into loss of millions of rupees to the national exchequer annually, the sources said.

To overcome this, the sources said that necessary amendments would be made in Pakistan Penal Code (PPC) and Merchandise Marks Act in consultation with Interior and Justice Division to make law more tougher and punishable so that this nefarious manufacturing activity may also be dealt with iron hand.