Tax hike to benefit illicit cigarette manufacturers

ISLAMABAD: The proposed unprecedented tax hike for the tax-paying tobacco companies will effectively benefit the already vast illicit cigarette manufacturers in Pakistan, a statement said on Wednesday.

A spokesperson for Philip Morris Pakistan Limited said that this will also lead to significant shortfalls in the government revenues, as the volumes will massively shift from the tax paid sector to the non-tax paid sector, as often seen in the past.

During the period 2019/21, the federal excise duty increase was 26 per cent. During the current fiscal year 2022/23, the federal excise duty on cigarettes was already increased 25 per cent.

The latest announcement to increase the federal excise duty on cigarettes by over 150 per cent will result in a price impact of more than 250 per cent for the consumers, he added.

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