Miftah Ismail, the Minister of Finance and Revenue, announced during a press conference that the Federal Government has increased the tax on cigarettes and tobacco by Rs 36 billion.
The charges, according to the Minister, are imposed to make up the shortfall created by the reduction in retail tax from 42 billion to 27 billion rupees.
At initially, the Ministry of Finance requested an 18 billion tax on cigarettes. The Federal Government chose to double the taxes, however, and levied them for a total of Rs. 36 billion.
Instead of charging Rs. 1,850 in total tax on a bundle of 50 packs of Tier-2 cigarettes (Capstan, etc.), Rs (1000 cigarettes). While the 50-pack pile of Tier-1 cigarettes (GoldLeaf, etc.) now has a total tax of Rs. 6,500 rather than Rs. 5,900.
However, the cigarette tax has increased from Rs. 10 per kilogram to Rs. 380 per kg, a 3,800% increase.
According to Miftah, the tax on cigarettes is a quitting tax while the tax on tobacco is an excise charge (tax).