Major tobacco companies struggle as cigarette production drops by 20.8 billion sticks in Pakistan

WEB DESK: The Federal Board of Revenue (FBR) has reported a significant decrease in cigarette production. In the fiscal year 2022-23, cigarette production dropped to 43.9 billion sticks, down from 64.7 billion the previous year.   

This affected major players like the Pakistan Tobacco Company (PTC), which saw a 32 per cent decline, and Philip Morris, with a 39 per cent reduction compared to the previous fiscal year.  

However, Khyber Tobacco saw a 48 per cent increase in production, while smaller producers collectively faced a 68 per cent decrease. During the first quarter of the current fiscal year, FBR collected Rs62.9 billion in revenue from the tobacco sector, having collected Rs177.7 billion in the previous fiscal year.  

FBR’s enforcement actions included 1,447 seizures and confiscations in the past fiscal year. They are also pursuing arrests and prosecutions in the tobacco sector to combat non-duty paid, counterfeit, and smuggled cigarettes.

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They plan to launch a portal for daily updates on enforcement actions in the coming month.  

During a session, an economist recommended a 19 per cent increase in the Federal Excise Duty (FED) on cigarettes as a strategy to boost revenue.   

According to The News, the government is considering this option, possibly in a mini-budget. This tax increase could generate about Rs16 billion in tax revenues, while also discouraging smoking and promoting health benefits.  

An anti-tobacco activist noted that the taxation levels were still below World Health Organisation recommendations, suggesting there is room to further increase the FED on the tobacco sector.