Dropping sales of ‘expensive cigs’ hinder FBR’s plan to collect more revenue

As the sale of cigarettes has decreased due to an increase in the federal excise duty on the fags, the tax collection of the Federal Board of Revenue has also gone down with it, reported 24NewsHD TV channel on Saturday.

According to the FBR sources, against the target of Rs4 billion, only Rs1.20 billion tax could be collected in April 2023. 

Sources said that the increase in federal excise duty on cigarettes has reduced the FBR's tax collection. The BBR failed to achieve its FED collection target in April.

The FBR could collect only 20% of the tax target on cigarettes in April 2023.

The main objective to increase the FED on cigarettes was to collect additional revenue. But due to an increase in the FED, the sale of fags dropped across the country and there was a significant increase in cigarette smuggling.

Sources said the registered cigarette manufacturers made a stack of 1.6 million cigarettes in April 2023.

Last year, in April 2022, the registered cigarette manufacturers produced a stack of 10 million cigarettes. 

Due to an increase in the FED on local cigarettes after the announcement of the mini-budget, the prices have increased by more than 250%. 

Sources revealed that due to the increase in the price of locally manufactured cigarettes, the demand for smuggled cigarettes has increased which is hurting the national exchequer.

They are of the view that the national exchequer will have to suffer a loss of billions of rupees in six months thanks to a decrease in the sale of expensive local cigarettes and their smuggling. 

Reporter Ashraf Khan