The federal government on Aug 22 promulgated an ordinance to slap an additional Rs36 billion tax on cigarettes, Rs2 billion on tobacco processing, and reduced levies on transport vehicles — to fetch an additional Rs38 billion in taxes, according to a report by The News.
The prices of cigarettes of tier-1 brands may go up by Rs20 to Rs30 per packet, while for tier-2 brands the rates will go up by Rs10 per packet.
On tobacco processing, the government has jacked up advance federal excise duty (FED) tax from Rs10 per kg to Rs390 per kg, which will be adjustable.
The government envisages the collection of Rs2 billion through this measure.
Just ahead of the International Monetary Fund’s (IMF) executive board meeting scheduled to be held in Washington on August 29, Pakistan has moved ahead to slap 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 Arif Alvi signed Tax Laws Second Amendment Ordinance 2022. The government, in a major move, has also waived fixed tax on small traders and retailers.
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.
The government did not slap regulatory duty on luxury items as it will be imposed through SRO after getting approval from tariff board and then the ECC might grant its assent.
Through RDs, the FBR plans to generate Rs5 to Rs14 billion in tax revenue, so in totality, the revenue impact might cross Rs50-52 billion.
“We have taken additional taxation measures of Rs38 billion and provided incentives/tax relief to the tune of Rs19 billion so the net additional revenues will fetch over Rs19 billion during the current fiscal year,” FBR Chairman Asim Ahmed told the paper.