High taxes weigh on tobacco industry

The legitimate tobacco industry in Pakistan faces a severe crisis, with heavy taxes on tobacco products leading to a significant decrease in production and substantial tax losses. According to the Pakistan Bureau of Statistics, legal cigarette production has plummeted by 40% in just five months due to the widening price gap between legal and illegal cigarettes, primarily attributed to increased excise duty. Between July and November of the current fiscal year, the legal cigarette industry witnessed a staggering 39.31% decrease in production, a figure four times higher than the average decline in other large-scale manufacturing industries. Overall, large-scale manufacturing output experienced an average decline of 0.80% during the same period, marking a negative 10.3% in the twelve months of the previous fiscal year. The production of the tobacco industry as a whole decreased by 39.31% from July to November 2023, with tax-paying tobacco companies recording a 28.4% decrease in production during the twelve months of the previous fiscal year.