Officials from tobacco companies are raising pointed questions about the multiple taxes levied on the industry and the transparency of funds meant to benefit growing regions. The debate centers on three major impositions—the Federal Excise Duty (FED), the Federal Tobacco Cess (FTC), and the Tobacco Development Cess (TDC)—and whether the revenues are translating into visible improvements for farming communities. Main Developments Taxes on tobacco in Pakistan are collected by three different bodies: the Federal Board of Revenue (FED), the Pakistan Tobacco Board (FTC), and the Khyber Pakhtunkhwa Excise Department (TDC). FED and TDC together account for the largest share of the tax burden on the crop. FED is applied at the green leaf threshing stage and includes an advance payment component currently set at Rs390 per kilogram. The rate has fluctuated over time: it was raised from Rs10 to Rs300 per kg in the 2018 mini-budget, reversed in June 2019, remained unchanged until 2021 despite attempts to revise it, and then increased again in September 2022 to Rs390 per kg. Read also: Pakistan Hosts OIC Ministerial on Women Amid Stark Gender Gap Rankings TDC, collected only in Khyber Pakhtunkhwa—the country’s main tobacco-producing province—has also risen sharply. The rate went from Rs6 per kg in 2023 to Rs25 per kg in 2024, and then to Rs27.5 per kg last year. An official at the Swabi deputy commissioner’s office estimated total TDC collections over the past two years at roughly Rs6bn across districts like Swabi, Mardan, Mansehra, and Buner, with Swabi alone contributing about Rs3bn. Despite these significant sums, reports and observations from several tobacco-growing regions indicate that the visible impact of such funds on local development remains negligible. Small cigarette manufacturers in Swabi have been protesting for two months, demanding the withdrawal of FED. Background Officials stress that FED is not a tax on growers but is applied at the manufacturing stage, making multinational and national companies, small cigarette manufacturers, and the business community liable. Importantly, it does not apply to tobacco destined for export. The FTC, collected by the Pakistan Tobacco Board, is designed to support regulatory and administrative functions related to the industry. TDC funds are legally ring-fenced for development activities in tobacco-growing districts, including road infrastructure, crop protection, agricultural development, and farmer welfare initiatives. The repeated rate hikes have raised concerns about whether the money is being used effectively. Why It Matters The gap between revenue collection and visible development raises questions about implementation efficiency and transparency. For farming communities in key districts like Swabi, Mardan, Mansehra, and Buner, the promised benefits from TDC and other levies have yet to materialize in tangible improvements. This disconnect could undermine trust in the tax system and its stated goals of supporting the sector. What's Next Small cigarette manufacturers continue their protests in Swabi, demanding a rollback of the FED. Whether the government will respond to these demands or introduce mechanisms to improve fund utilization remains an open question. The debate over tax burden versus development impact is likely to intensify as collection figures grow and local expectations remain unmet.