Tobacco farmers threaten to protest against high taxes on cigarette producers

ISLAMABAD: The tobacco farmers from Khyber Pakhtunkhwa on Tuesday expressed concerned over increase in tax on cigarette producing companies saying the decision will destroy the formal sector.

Now the two giant companies might not be able to procure tobacco from the growers in the wake of increased taxation from Rs153 billion to Rs315 billion.

“We demand from the government to review its policies otherwise we will launch protest campaign after Eidul Fitr,” warned the tobacco farmers’ body from Mardan and Swabi districts while addressing a press conference here on Tuesday. Tobacco is an important cash crop and any threat to this crop is a threat to the survival of tobacco farmers which could cause serious socio-economic consequences, said the farmers’ representative.

They added that the transfer of a large portion of the tobacco crop from the legal industry to illegal players would result in inordinate delays in payments and unemployment.

Only two tobacco companies with a market share of around 60 percent contribute around 98 percent in the total tax collection from the industry, while the rest of the tobacco companies operating locally pay only 2 percent tax despite having a market share of about 40 percent.

It is worth mentioning here that the government collected Rs153bn tax from two companies in last fiscal year while a target of Rs200bn was set for the current fiscal year that was further revised to Rs315bn slapping the legal tobacco industry with additional taxes of more than 150 percent.