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Tag: Pakistan

  • Pakistan Sets Prices to Stabilize Tobacco Crop

    Pakistan Sets Prices to Stabilize Tobacco Crop

    Tobacco growers in Pakistan have welcomed the federal government’s decision to set a Minimum Indicative Price (MIP) for various tobacco types, calling it a crucial step for protecting growers’ incomes. The Economic Coordination Committee approved the MIP, making it mandatory for tobacco companies to buy surplus crop at or above the set prices, in line with tobacco marketing law MLO-487.

    Farmers pointed to rising input costs, with tobacco cultivation costing up to Rs1.9 million ($6,650) per hectare, compared to around Rs300,000 ($1,050) for wheat. “If tobacco prices drop, farmers risk losses in the hundreds of thousands,” said former Pakistan Tobacco Board (PTB) director Muhammad Ayaz.

    MIP rates include:

    • Flue-cured Virginia: Rs545/kg ($1.91) (plains), Rs615.9/kg ($2.16) (sub-mountainous areas)
    • White Patta: Rs262.6/kg ($0.92)
    • Barley: Rs316/kg ($1.11)
    • Dark air-cured: Rs388.9/kg ($1.36)
    • Naswar/snuff/hookah: Rs262.6/kg ($0.92)
    • Sun-cured Virginia: Rs350.2/kg ($1.23)
  • Pakistani Vape Vendors Accuse Govt of Harassment as Court Case Proceeds

    Pakistani Vape Vendors Accuse Govt of Harassment as Court Case Proceeds

    On July 3, Pakistan’s Lahore High Court (LHC) disposed of over 100 petitions from vape and e-cigarette vendors across Punjab, barring authorities from taking enforcement action until proper legislation is in place. The petitioners alleged police harassment despite their shops being officially reopened. A government lawyer countered that no formal crackdown was underway and said a draft law to regulate vaping was being prepared, with stakeholder input to be considered.

    The court emphasized that the right to trade is constitutionally protected and questioned the legitimacy of enforcing restrictions without a legal basis. It ruled that no action can be taken against vape businesses until relevant legislation is enacted.

    On June 3, Chief Minister Maryam Nawaz announced a provincial ban on e-cigarettes and ordered vape shops to be sealed. Weeks later, LHC Justice Anwar Hussain said the government failed to justify the crackdown legally and issued a stay order, halting further action until a final decision is made.

  • Pakistan’s Largest Tobacco Growing Region Suffers Huge Storm Damage

    Pakistan’s Largest Tobacco Growing Region Suffers Huge Storm Damage

    Nearly 60% of the Virginia tobacco crop in Pakistan’s Swabi district, Khyber Pakhtunkhwa, has reportedly been badly damaged by a thunderstorm, according to local farmers. The damage occurred at a critical harvesting stage, rendering the affected leaves unsuitable for curing, which has deeply impacted growers’ livelihoods.

    “Once the tobacco plant falls to the ground, its leaves are no longer useful for curing, causing growers huge losses,” said Safdar Khan, a farmer from the Maneri Bala village, adding that the government didn’t come to their aid after being struck by a natural calamity.

    Swabi produces about 53% of KP’s tobacco output, with an estimated 15,500 hectares planted, last year producing about 42 million kg.

    “Due to the damage to our crop, we are stuck in an economic quagmire, and there is no one to help us,” said local grower Baswar Khan.

  • WHO Wants Pakistan to Raise Cigarette Taxes

    WHO Wants Pakistan to Raise Cigarette Taxes

    The World Health Organization (WHO) criticized Pakistan’s Federal Cabinet’s decision to keep its Federal Excise Duty (FED) on cigarettes unchanged in the 2025–26 budget, saying it will likely boost consumption and undermine public health. According to a WHO analysis, FED rates haven’t increased since February 2023, while inflation has surged 26%, resulting in declining real prices and even greater affordability.

    For fiscal year 2024–25, WHO estimated cigarette production in Pakistan reached 37 billion sticks, generating Rs 208 billion ($728 million) in FED revenue. With excise duty unchanged, cigarette output is projected to rise to 38 billion sticks in 2025–26, yielding Rs 217.6 billion ($762 million) in revenue.

    WHO says a Rs 39 ($0.14) per pack FED increase would reduce smoking by 10.7%, lower production to approximately 34 billion sticks, and increase revenues by 20.9%.

  • Pakistan Ordered to Reopen Vape Shops 

    Pakistan Ordered to Reopen Vape Shops 

    Pakistan’s Lahore High Court granted interim relief to vape shopkeepers in Punjab by ordering the reopening of shops closed by the provincial administration. The decision follows a petition by 74 vape dealers, arguing the closures were illegal and without notice.

    Justice Anwar Hussain said the government failed to justify the crackdown legally and issued a stay order halting further action until a final decision is made. The Punjab government has until July 3 to submit a formal reply.

    The vape shops were sealed following a provincial ban on e-cigarettes announced on June 3 by Chief Minister Maryam Nawaz to “protect youth health.” Petitioners claim the ban is unconstitutional and violates their right to lawful business.

  • Pakistan to Fund University with Tobacco Levy

    Pakistan to Fund University with Tobacco Levy

    Pakistan’s federal government plans to impose a levy on tobacco products to help cover the operational costs of the upcoming Daanish University in Islamabad. The decision was discussed during a project review meeting led by Prime Minister Shehbaz Sharif on June 18.

    The university is being funded by £190 million returned by the UK in a corruption case, with the new tobacco levy intended to support its ongoing expenses. Bids for design and implementation were recently opened, mainly involving firms from China and Turkiye.

    PM Sharif emphasized global education standards, calling for smart boards, e-libraries, and a world-class digital library. He also urged fast-tracking the project and expanding Daanish schools across underserved regions.

  • Pakistan Shifting Toward Open Market Tobacco Pricing

    Pakistan Shifting Toward Open Market Tobacco Pricing

    Pakistan’s Economic Coordination Committee (ECC) directed the Ministry of National Food Security and Research to prepare a roadmap for moving away from the current practice of setting Minimum Indicative Prices (MIPs) for tobacco and transition toward open market pricing, sources told Business Recorder.

    While MIPs serve as a price floor to protect tobacco farmers—particularly when supply exceeds demand—they are not support prices and do not involve government subsidies.

    The ECC noted that shifting to market-driven pricing aligns with the broader government policy of phasing out price controls in favor of demand-and-supply dynamics. However, concerns were raised that cess (a local tax on tobacco), calculated as a percentage of MIPs, could be reduced if open market prices rise above government-set minimums.

    Despite approving revised MIPs for various tobacco types for the 2025–26 fiscal year, the ECC emphasized the need for further deliberation before dismantling the current system. The Ministry was instructed to develop a comprehensive transition plan and present it to the ECC in due course.

  • Pakistan Increases Tobacco Tax 240%

    Pakistan Increases Tobacco Tax 240%

    With cigarette manufacturers in Pakistan already pointing to an excessive Federal Excise Duty (FED) as a reason for a significant decrease in sales and a rising black market, the federal government announced it is imposing a 6% withholding tax on cigarette distributors in the 2025-26 budget, senior sources told ProPakistani. This will be an increase from the previous 2.5% rate.

    The provision for withholding tax rates under Section 153 of the Income Tax Ordinance will be changed to charge the new tax on the gross amount of payment received by distributors when they hand over cigarette sticks to retailers.

    It was previously reported that Pakistan’s government was facing pressure from the World Health Organization to increase its FED further.

  • Pakistan’s Illicit Cigarette Trade Surges to 58% of Market

    Pakistan’s Illicit Cigarette Trade Surges to 58% of Market

    The director of the Pakistan Tobacco Company (PTC), Asad Shah, voiced concern over the growing share of illicit cigarette trade in Pakistan, now estimated at 58% of the market. Speaking at a pre-budget media briefing, Shah highlighted that the total size of the cigarette industry in Pakistan stands at approximately 82 billion sticks annually. Despite this, only 34 billion sticks are currently taxed, a stark decline from 67 billion a decade ago.

    He emphasized the significant loss in potential tax revenue, stating that the sector could generate up to Rs 570 billion ($2 billion) annually. However, only Rs 292 billion ($1 billion) was collected during the fiscal year 2023-24, with Rs 223 billion ($781 million) received in the first 11 months of the current fiscal year.

    Shah revealed that while the legal cigarette sector holds just 42% of the market, it contributes a staggering 98% of the total tax revenue. He criticized the lack of penalties for violating minimum pricing laws, stressing that no policy can be effective without equal enforcement across the board. He also raised alarm over the sale of locally produced cigarettes without tax stamps, which undermines the government’s track-and-trace system.

    To address these issues, Shah proposed several measures, including a revision of the minimum pack price to counter the perception that cigarettes are inexpensive in Pakistan. He also recommended a significant reduction in the adjustable tax on cigarette filter material (acetate tow) from Rs 44,000 $154) per kg to Rs 4,000 (14) per kg to discourage smuggling. Authorities have already seized 450 metric tons of smuggled acetate tow this year.

  • Despite Increase, Pakistan Faces Cigarette Tax Revenue Shortfall

    Despite Increase, Pakistan Faces Cigarette Tax Revenue Shortfall

    Contrary to recent optimistic projections, Pakistan’s Federal Board of Revenue (FBR) tax collection from documented cigarette industry is expected to fall significantly from last year, highlighting growing challenges in the sector amid rising smuggling and regulatory inefficiencies.

    For the 2024-25 fiscal year, the government budgeted revenue collected from the cigarette industry to reach PKR 285 billion ($998 million). However, industry insiders and financial analysts say that figure is not grounded in factual analysis, and PKR 250 billion ($875 million) is more realistic.

    According to Business Recorder, a major factor behind the revenue shortfall is the exorbitant imposition of Adjustable Federal Excise Duty (FED) on acetate tow, a key raw material used in cigarette manufacturing. The industry recommended an adjustable FED rate of PKR 4,000 per kg, which was intended to increase the cost of doing business for the illicit players and was supposed to be adjusted against the final tax liability improving documentation and reconciliation. However, the government imposed a FED rate of PKR 44,000 per kg, a sharp rise that has inadvertently made smuggling far more lucrative and has led to a dramatic increase in illicit activity.