Tax hike for tobacco companies to favour illicit cigarette manufacturers

KARACHI-The proposed unprecedented tax hike for the tax-paying tobacco companies will effectively favor the already vast illicit cigarette manufacturers in Pakistan. This will also lead to significant shortfalls in government revenue as the volumes will massively shift from the tax-paid sector to the non-tax-paid sector as often seen in the past, said spokesperson Philip Morris Pakistan Ltd.
“During the period 2019-2021, the FED increase was to the tune of ~26%. During the current fiscal year 2022-23, FED on cigarettes was already increased by ~25%. The latest announcement increases FED on cigarettes by greater than 150% which will result in a price impact of more than ~250% for adult consumers versus Q1, 2022,” he said.

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