The government has imposed new taxes of Rs 36 billion on cigarettes after failing to collect a Fixed tax of Rs 40 billion from retailers.

To fill the revenue gap, the government has decided to increase the Federal Excise Duty (FED) rate from Rs1,850 per 1,000 cigarettes to Rs2,050 for tier-2 and from Rs5,900 per 1,000 cigarettes to Rs6,500 for tier-1 cigarettes.

The government has so far increased the tax rate by 25 percent on cigarettes in the last two months.

On tobacco processing at Green Leaf Threshing Processing (GLTP), the tax rate has also been increased from Rs10 per kg to Rs380 per kg.

However, illegal cigarette manufacturers are misleading tobacco farmers and they are being made to believe that advance tax will be applied to them, however, the tax will be paid by manufacturers and not the farmers as per FBR.

The illicit mafia who are also senators overpower poor farmers and use them in the court of law to obtain a stay order on the GLT tax. Hammad Azhar who in 2018 had also put a tax of PKR300 on GLT and was then made to withdraw after facing severe backlash from the illicit mafia and pressure from Asad Qaiser.

Anti-Tobacco organizations backed by illicit tobacco manufacturers who lobby against the government hampering their efforts of tax collection by victimizing farmers, running anti-state campaigns like taxing the already tax paying legal manufacturers and taking funding from international organizations who have anti-Pakistan agenda

Due to the non-uniform application of laws in the cigarette industry, 98% of the total revenue from cigarettes is paid by the top two companies, while the share of more than 48 other companies is only 2%.

According to experts, further, an increase in taxes on cigarettes to meet the budget targets will be a means of promoting the illegal cigarette trade in the country resulting in a fall in foreign direct investment and restricting other players to enter the Pakistani market.

The government in power has done several measures to correct the system, and consistent efforts are required to make bring the tax-evading sector into the tax net.