ISLAMABAD: The government in the Fiscal budget 2013-14 introduced remarkable changes to the Federal Excise Duty (FED) structure on cigarettes have shown excellent results and is poised to give a growth of over 14% in government revenue, which in absolute rupee terms is the highest growth in any given year for government revenue from the tobacco industry.
"FBR figures show that the revenue from tobacco industry as of April has already crossed Rs.70 billion and the expected revenue by end of the fiscal year is expected to touch Rs.87 billion which is higher than the projected target for FY 2013-14", says a statement issued by Mishal Research.
The Mishal Research is a partner institute of the World Economic Forum and carries out research on Pakistan's economic profile on periodic basis.
According to Research Institute Excise structure for cigarettes was changed from a complicated three tier mixed system to a dual tier fully specific structure.
The tobacco experts suggested the structure to the FBR on the basis that a fully specific system disconnects government revenue from cigarette prices.
The Mishal further said that Industry representatives stated that they were aware of the low collections during the first few months of the fiscal year, however this is a normal phenomenon of the tobacco industry where the trade channel hoards stocks at pre-budget prices and witness low sales during the post-budget months.
Despite apprehensions by some FBR officials, it is interesting to see that the new structure has performed exceptionally well.
Illicit trade, steep excise hikes and pre-budget hoarding are one the key challenges facing the tobacco industry. The industry is seeking legislation to counter the issue of pre-budget hoarding by way of introducing bi-annual excise increases, in line with the Consumer Price Index", Mishal statement said.
It added that the industry also seeks increased and effective enforcement of laws to counter the menace of illicit trade in cigarette, which is growing at an exponential rate, undermining government fiscal and health objectives.
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