Tobacco Companies Experience 32% Production Drop Amid FED Imposition: FBR

The production of multinational tobacco companies has declined by 32 percent due to the imposition of Federal Excise Duty (FED).

According to the details, the Track and Trace System of FBR has shown a 32 percent decline in production of two major players in the tobacco sector as overall production reduced to 43.9 billion sticks in 2022-23 against 64.7 billion in 2021-22.

Reportedly, the production of Pakistan Tobacco Company (PTC) has faced a decline of 32 percent in FY23 and Philip Morris Pakistan by 39 percent in FY23, if compared with the last financial year.

However, the production of Khyber Tobacco has gone up by 48 percent in the last financial year 2022-23. The production of others having a negligible share faced a decline of 68 percent in production.

Sources told ProPakistani that the decline in production is due to the FEDs which has contributed to reduced sales.

The FBR’s Project Director of Track and Trace Zaheer Qureshi said during a session, organised by the Society for the Protection of the Rights of the Child (SPARC), on Increasing Tobacco taxes to Ease Inflation here on Friday that the FBR undertook 1447 actions of enforcement of seizure with confiscation in the last financial year.

Akhtar Abbas, Secretary, Sales Tax Budget, FBR shed light on pressing issues such as the prevalence of non-duty paid, counterfeit, and smuggled cigarettes.

He highlighted the challenges posed by a limited workforce, logistical hurdles, and an undocumented economy, which have made tax evasion and duty avoidance alarmingly accessible. These issues have further contributed to the high incidence of tax-related problems, resulting in negative externalities that harm not only public health but also the broader socio-economic landscape.

Another FBR representative said in his presentation that the tax machinery was undertaking arrest and prosecution in the tobacco sector to discourage non-duty paid, counterfeit and smuggled cigarettes.

When asked about the number of arrests and prosecutions, the FBR high-ups replied that they were developing a portal on which the details of enforcement actions taken by the FBR would be shared on a daily basis from the first week of next month.

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