According to the Pakistan Tobacco Company (PTC), farmers are selling tobacco for between Rs. 430 and Rs. 1,400 per kg as opposed to Rs. 310 due to a shortage of more than 10.3 million metric tonnes on the market.
In a media briefing at Akora Khattak, PTC representatives explained that despite the factories’ plans to purchase 8.5 million kilogrammes of tobacco from farmers, they only managed to produce seven million due to a 10.3 million tonne shortage brought on by unfavourable weather.
Farmers are selling tobacco for Rs. 430 to Rs. 1,400 per kg despite the fact that the minimum price is Rs. 310 because there is a shortage on the market, they continued.
According to a representative, the sharp decline in Pakistan’s tobacco exports was brought on by the rise in tobacco prices. 42 million kilos were the intended domestic tobacco export goal for the current year.
The representative added that tobacco prices are being illegally increased by 350 percent by cigarette factories that are allegedly engaged in tax evasion. Tobacco purchases by tax evasion-related cigarette factories should be made in accordance with the law
He added that the market has been flooded with illegal and smuggled cigarettes, whose market share has increased to more than half as a result of the recent extraordinarily high increase in cigarette taxes.
In the fiscal year 2022-2023, he increased the tax rate on the cigarette industry by 150 percent. Despite the tax rate increase, 175 billion rupees were collected, as opposed to the desired 240 billion.
In response to a query, he stated that not all cigarette factories have yet adopted the track and trace system. Without exception, track-and-trace systems should be implemented in the sector.
They advised FBR to activate the track and trace system for two factories in Azad Kashmir as well.
One of them claimed that the sale of illicit cigarettes has increased at an unprecedented rate since the tax rates were raised. The sale of legal cigarettes is predicted to decline over the course of the following year, while the sale of illicit cigarettes is predicted to increase.
He claimed that compared to June of last year, cigarette production dropped by 44% in June of this year, but that illegal and smuggled cigarettes made up the difference.
He continued by saying that in the last three months, the market share for legal cigarettes has dropped from 53% to 50% as a result of the imposition of a high tax. He worries that this rate will likely rise even further in the coming days as the market for illicit and smuggled cigarettes increases by 47 percent to 50 percent.
