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34% of tobacco sector paying just 2 percent tax, Chairman FBR briefs Senate Committee

34% of tobacco sector paying just 2 percent tax, Chairman FBR briefs Senate Committee

ISLAMABAD: The Senate Special Committee rejected the tax department briefing on the matter of declining of production of tobacco sector and submitting fewer taxes by them.

The special committee meeting was held at Parliament House under the chairmanship of Senator Kalsoom Parveen. Chairman Federal Board of Revenue (FBR) Jahanzaib Khan informed the committee that 66 percent people are doing legitimate business in tobacco sector and they are paying 98 percent tax and the rest 34 percent are paying just 2 percent tax.

Besides this, the chairman told that legitimate industry (multinational companies) production has been declined and the department did not differentiate between the multinational as well as domestic industry.

FBR Member Policy Dr Hamid Ateeq told the forum that FBR is collecting four types of taxes inluding FED, sales tax, income tax and RD from this sector. He further told the committee that cigarettes production of multinational companies has also been declined but their profit has been increased.

Convener of committee asked the chairman FBR that the representatives of companies themselves informed that they have earned 60 percent more money, national exchequer has to bear Rs67 billion losses and ‘you are telling that their production has been declined’. ‘Department has not taken any action against those who introduced the tier3 system and I know whose family members were doing job in multinational companies’.

Chairman replied that no family members of present management of FBR are working in any tobacco company and in fact, revenue has been increased through imposition of tier3 system.

Adding that member IR policy told that department is going to stamp cigarettes from March, this way we not only can increase our revenue but also control the illicit cigarette.

Member IR told that department will collect Rs 15 billion from tobacco sector in this year while in the next year, we have estimated to collect Rs 150 billion from this sector.

Senator Azam Swati said ‘the weak enforcement is creating problems, if you catch two or three big fish, I can assure you matters can be solved easily’. The representatives of Pakistan Tobacco Board informed the committee that there are 75,000 tobacco growers producing tobacco all over Pakistan and out of these more than 45,000 growers are located in KP producing 95 percent of Flue Cured Virginia over an area of 25,500 hectares in the five districts of KP.

Senator Dilawar Khan was of the view that there is a dire need to revisit SRO 1149 (1)/2018 as multinationals companies can export GLT but local manufacturers could not. This SRO is revisited as this has discouraged exports.

Senator Kulsoom Parveen said, ‘I am not satisfied with the FBR briefing and she directed FBR to revisit the SRO and its clauses in consultation with all the stakeholders’ and said that she would once again arrange a sitting with the FBR to review this issue in detail.