The meeting of special committee on decline in tax collection from tobacco sector met here with Senator Kalsoom Parveen in the chair at the Parliament House on Tuesday.
While briefing the committee, Member FBR Inland Revenue Policy Dr. Hamid Ateeq Sarwar was of the view that illegal sale of tobacco is causing decline in tax collection from tobacco sector, saying over tobacco of 70 million kilograms is produced in Pakistan. However, only 45 percent of it purchased through legal means while 15 million kilograms of tobacco vanishes from the market. To this Senator Azam Khan Swati replied that it is possible only in connivance with the insiders, saying there is dire need of putting in place further stringent punishment for those found involved in connection with this, besides bringing in a workable policy for overcoming the situation.
Further briefing the committee, the FBR member stated that several meetings were held with tobacco growers on the matter, adding that their major problem is export of the produce on their own whereas this job is done only by the local traders. There are law and order issues in Azad Kashmir, erstwhile tribal areas and some other areas therefore huge quantity of tobacco is stolen in theses areas, he revealed before the committee, adding in spite of all the hurdles the FBR is collecting tax from these areas as well as taking actions against the elements found involved in illicit trade.
FBR Member said that the WHO and Ministry of Health have proposed to increase taxes on cigarettes. At present, the minim taxes imposed on cigarette is Rs 33, but in the markets the cigarette pack is available even below the price of Rs 25-30.
To a query, FBR officials said that the Pakistan Tobacco Company is not involved in tax evasion.
Whilst the committee proceedings, Senator Parveen stated that the issue of decline of 60 billions from the tobacco sector was taken up in view of assisting the tax authorities in drafting a viable tax policy for this sector.
Dilawar Khan was in view that the FBR is the most significant stakeholder in the tobacco industry. He stated that through an SRO 1149, it was given impression that tobacco export was harmed, adding non-duty paid cigarette coming from Azad Kashmir has damaged the local market as well as framing flawed polices contributed in this regard.
With a view to widen the tax base, the FBR member elaborated the Board has presented suggestions, including showing flexibility towards the areas where law and order issues prevail.
Among others the committee meeting was attended by senators including Azam Khan Swati, Mushahid Hussain Syed, Dilawar Khan, Dr Ashok Kumar, FBR member and senior officials.