Shah said Pakistani markets are dumped with various brands of imported and smuggled cigarettes while the authorities concerned, especially Federal Board of Revenue (FBR), don't take appropriate steps to check the menace. He said smuggled cigarettes are available everywhere even in the Parliament, adding even if finance minister or chairman FBR are involved in the business of cigarette smuggling, stern action must be taken against them.
The committee also recommended that the special audit report on the increase of third tier tax slab on cigarettes to be forwarded to the Senate Standing Committee on Health and Finance, so that the Senate committees, after the end of National Assembly term and PAC, can take necessary steps to fix the responsibility on the persons behind the move.
The committee said the move has caused Rs 6 billion loss to the national kitty, adding that the introduction of third tier slab provided a benefit of Rs 33 billion to two cigarette manufacturing companies. The committee members said the move has resulted in the increase of smoking by 23 percent. The inquiry should identify the reasons of increase in the sale and use of cigarette, its illegal availability and financial burden. The PAC said this is very important national issue and those responsible for it should be identified.
The PAC also recommended increase in the FBR staff. Earlier, the senior FBR officials briefed the committee about the audit report of tobacco industry and decrease in the federal excise duty. The committee was informed that decrease in taxes was witnessed during 2016-17. The committee chairman said number of TB patients is on the rise due to increase in the use of cigarettes. He said the national exchequer also faced loss of Rs 50 billion in the last two years.
The PAC chairman expressed serious concerns over reduction in tax collection from the tobacco sector. He said FBR revenue from tobacco sector has been decreasing continuously since 2014-15. Though FBR has introduced third slab on cigarette price to control the sale of non-customs paid cigarette (illicit trade) and increase in smoking rate among countrymen, smuggling continues and smoking rate is ever increasing in the country, he said
The MNCs reduced cigarette production by 50 percent in 2016 in a planned manner only to get the introduction of third-tier structure on cigarette price, said Khursheed Shah. "Third slab has caused Rs 30 billion loss while 158,000 cases of cancer surfaced due to smoking and FBR has made cigarette price cheaper only to benefit MNCs," said Shah.
He added that the only solution to control the increase in smoking rate is to jack up the price of cigarette in the country.
The committee recommended the government to enhance tax on the production, sale and marketing of the cigarettes as increasing smoking activities among the people are causing serious health problems including raise in the TB and other lungs related diseases. FBR member admin and acting chairman Tasneem Rehman responding to the audit objection said the third tire was introduced after 50 percent cut in cigarette production by Pakistan Tobacco Company (PTC) Limited which caused Rs 60 billion revenue loss to the FBR.
Khursheed Shah said FBR did all this to benefit the PTC and he (Shah) has all the record along with details who is receiving millions of rupees bribes from PTC, if FBR chairman is willing, "I will show the lists," Shah said. Why reduction in cigarette prices was recommended by the FBR which resulted in increase in number of smokers by 25 percent across the country, he asked the FBR
Rehman said FBR got approval of the third tier of excise duty from the Parliament, adding that FBR always faces serious financial constraints despite it collects billions of rupees in taxes but is using only one percent of it. He also lamented that FBR enforcement department is also too toothless as the Customs force has even not up-to-date guns. Syed Naveed Qamar and Arif Alvi also asked the FBR to name the persons behind the introduction of third tier of excise duty through Finance bill 2017, saying that increasing revenue generation was not greater issue than maintaining good health of the citizens.