Tobacco farmers warn against FED rise.

ISLAMABAD: Tobacco farmers in Khyber-(K-P) Pakhtunkhwa’s economically marginalised areas have expressed concern about the recent increase in federal excise duty (FED) on cigarettes. They have warned that the move will harm tobacco farmers’ economic prospects, increase poverty and unemployment, and may even encourage some farmers to turn to anti-national elements, endangering the country’s integrity.

Tobacco farmers from K-P’s Mardan and Swabi districts spoke at a press conference about the social and economic impacts of the FED increase on the tobacco industry. They emphasised that tobacco is an important cash crop, and any threat to this crop is a threat to tobacco farmers’ survival, which could have serious socioeconomic consequences.

Transferring a large portion of the tobacco crop from the legal industry to illegal players would reduce economic prospects and cause excessive payment delays, affecting cash flow and unemployment. Only two tobacco companies, with a market share of around 60%, contribute 98% of tobacco tax collection, while all other tobacco companies operating locally contribute only 2%, despite having a market share of around 40%. More than 90 tobacco companies fail to pay their taxes, resulting in a loss to the national exchequer.

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The farmers proposed that the government crack down on companies and brands selling illegal cigarettes and subject them to taxation.

It is worth noting that the government collected Rs153 billion in taxes from two companies in 21-22, while a target of Rs200 billion was set for 22-23, which was later revised to Rs315 billion, slapping the legal tobacco industry with more than 150% additional taxes.