Cabinet to Approve Up to 2.45% Increase in Tobacco Cess Rates

The federal cabinet will approve an increase of up to 2.45 percent in tobacco cess rates just before next year’s budget.

Sources said that the Ministry of National Food Security & Research had asked the cabinet to approve this increase.

The current cess rates on all types and varieties of tobacco that were specified by the federal government on July 14, 2021, need to be enhanced in line with the increase in the Minimum Indicative Price (MIP) of all types of tobacco that was announced on February 10, 2022.

Last Friday, the Economic Coordination Committee (ECC) approved an increase of Rs. 6 (2.45 percent increase) per kg of the new cess rate of Flue-Cured Virginia (FCV), including plain and sub-mountainous areas.

It also approved an increase of Rs. 3.60 (2.41 percent) per kg in new cess rates for Dark Air Cured Tobacco (DAC), Rs. 3 per kg (2.44 percent) White Patta (WP), Rs. 5 per kg (2.67 percent) Burley, Rs. 3 per kg (2.44 percent) of naswar/snuff/hookah and rustica tobacco and its products.

The MIP of Flue-Cured Virginia (FCV) in the plain areas is Rs. 245 and Rs. 281.13 in the sub-mountainous areas.

Similarly, the MIP of Dark Air-Cured Tobacco (DAC) is Rs. 149.09. It is Rs. 123 for WP, Rs. 187.50 for Burley, and Rs. 123 for naswar/snuff/hookah and rustica tobacco products.

The Pakistan Tobacco Board (PTB) was established to regulate and promote the export of tobacco and tobacco products, conduct research on tobacco, and increase tobacco areas.

It is a self-sustaining organization that meets its expenses through a collection of cess and the federal government has levied the tobacco cess. The cess rates under the law that do not exceed three percent ad valorem are to be notified by the government.

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