Khyber Pakhtunkhwa govt to boost revenue with new tobacco excise duty

PESHAWAR: The provincial government of Khyber Pakhtunkhwa has decided to introduce a new excise duty on tobacco to increase province’s revenue.

This decision was made during a high-level meeting chaired by Khyber Pakhtunkhwa Finance Advisor Muzzammil Aslam, Agriculture Minister Major Sajjad Barkwal, and Excise Minister Mian Khaleeq ur Rahman.

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The meeting, attended by key officials including the Excise Secretary, Agriculture Secretary, Law Secretary, and Director General of Excise, focused on the fiscal challenges and opportunities facing the province. A notable outcome was the agreement to impose a provincial excise duty on tobacco, following the earlier proposal to increase the tobacco development cess.

“The revenue generated from this new excise duty will be allocated to the health sector,” the finance advisor said, adding that the bill for this new levy would soon be submitted for legislative approval.

During the briefing, it was highlighted that approximately 80 per cent of Pakistan’s tobacco is produced in Khyber Pakhtunkhwa. Despite this, the financial benefits from tobacco are currently being enjoyed by other provinces due to federal distribution policies.

Following the 18^th amendment, the federal government retained control over tobacco revenues, which Khyber Pakhtunkhwa officials argue should be a provincial right.

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This year alone, the federal government is expected to collect Rs 250 billion from tobacco revenues – a significant portion of which will be redistributed across other provinces. Khyber Pakhtunkhwa officials emphasised that reclaiming a share of this income is crucial for the province’s financial autonomy and development.

The decision to levy an excise duty on tobacco marks a strategic effort by the provincial government to ensure that a fair portion of the tobacco revenue remains within the province, supporting local economic and social initiatives, particularly in healthcare.