ISLAMABAD: On Monday the government promulgated an ordinance to impose Rs36 billion additional tax on cigarettes. The government would generate Rs2 billion more from tobacco processing, and changed structure of levies on transport vehicles.
With the new taxation in place, the prices of cigarettes of tier-1 brands are expected to go up by Rs20 to Rs30 a packet, while for tier-2 brands the rates will go up by Rs10 per packet.
On tobacco processing, the government has enhanced advance federal excise duty (FED) tax from Rs10 per kg to Rs390 per kg and it will be adjustable.
Just six days ahead of the International Monetary Fund’s (IMF) executive board meeting, on August 29 in Washington, Pakistan has enhanced taxes on cigarettes and tobacco processing to secure the revival of stalled programme and release of $1.17 billion tranche under augmented $7 billion extended fund facility (EFF).
President Dr Arif Alvi signed the Tax Laws Second Amendment Ordinance 2022. The government has waived fixed tax on small traders and retailers and shifted this tax burden on cigarette makers.
The government slashed the tax burden on retailers and brought down the tax collection target from Rs42 billion to Rs27 billion by doling out incentives of Rs15 billion to traders, who are considered the major constituency of the ruling PML-N.