Tobacco Exporters Advocate for Tax Reforms to Boost Global Competitiveness

Pakistani tobacco exporters have cautioned that the existing tax framework presents obstacles, especially for smaller businesses, and have urged the government to implement a more competitive taxation approach.

A delegation of prominent tobacco exporters conveyed these worries during a meeting with Federal Minister for Commerce Jam Kamal Khan on Monday, according to a statement issued by the commerce ministry on Tuesday.

During the discussion, exporters highlighted that the current tax structure—which encompasses a Federal Excise Duty (FED) of Rs390 per kg, Provincial Excise Duty (PED) of Rs50 per kg, Federal Tobacco Cess of Rs15.15 per kg, and a Provincial Development Cess of Rs25 per kg—totals Rs480.15 per kg.

“They stated that this financial burden poses difficulties, particularly for smaller exporters, and suggested that a more competitive taxation system would aid in strengthening Pakistan’s standing in the global tobacco arena,” the statement noted.

The exporters underscored that tobacco, similar to other agricultural goods like sugarcane, cotton, and citrus, should receive support through market-oriented strategies. They pointed out that mandatory annual price adjustments under current regulations could impact competitiveness in export markets.

Kamal acknowledged the concerns and reaffirmed the government’s dedication to balanced policies aimed at fostering growth.

He remarked that optimal revenue generation arises not only from taxation but also from industrial growth and increased exports.

Boosting Tobacco Revenue Through Curbing Illicit Trade

Kamal observed that comparable concerns have been voiced by other sectors, such as beverages, regarding the effects of substantial taxation on consumer demand and revenue collection.

The tobacco exporters also advocated for the revitalization of the Pakistan Tobacco Board (PTB) to facilitate coordinated efforts in export promotion and policy support. In response, Kamal proposed the creation of a Sectoral Council for Tobacco, akin to other existing sectoral councils, to offer a structured platform for industry discussion and representation.

The minister further informed the delegation that a revenue policy committee has been established independently of the revenue collection mechanism—a crucial measure toward more informed and consultative policymaking.

Furthermore, exporters lauded the government’s ongoing initiatives to promote trade and emphasised the tobacco industry’s considerable contribution to employment, rural advancement, and export profits. They indicated that with focused assistance, tobacco exports possess the capacity to increase substantially, bolstering national revenue objectives.

Exporters commended Kamal and voiced confidence that with sustained government backing, the industry could substantially expand its export footprint, as per the statement.

Pakistan’s tobacco exports reached $158.35 million in the current fiscal year (July–April), demonstrating encouraging expansion in markets like Belgium, the UAE, Greece, and the Philippines.