The Pakistani government has issued a decree to generate an additional 38 billion rupees in tax revenue through various measures. These include imposing a tax of 36 billion rupees (approximately 1.14 billion yuan) on cigarettes, as well as a tax of 2 billion rupees on tobacco processing. Additionally, taxes on transport vehicles have been reduced.
In this significant move, the government has waived fixed taxes for small traders/retailers. As a result, the price of a pack of premium brand cigarettes may increase by 20-30 rupees, while the price of a pack of lower-tier brands may go up by 10 rupees.
In the tobacco processing industry, the government has raised the prepaid Federal Excise Duty (FED) from 10 rupees per kilogram to 390 rupees per kilogram. The government hopes to collect 2 billion rupees through this measure.
Before the International Monetary Fund's executive board meeting held in Washington D.C. on August 29, 2022, Pakistan had already begun to impose taxes on cigarettes and tobacco processing to ensure the recovery of its stalled economy. This move was part of the country's efforts to receive $1.17 billion under the $7 billion Extended Fund Facility (EFF).
The federal excise tax on locally manufactured cigarettes has increased from 5,900 rupees per 1,000 sticks for Grade 1 cigarettes to 6,500 rupees per 1,000 sticks, while Grade 2 cigarettes have seen an increase from 1,850 rupees per 1,000 sticks to 2,050 rupees per 1,000 sticks.
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