New tobacco policy to be prepared by May

Senator Parveen urges FBR to increase tax collection from tobacco sector

ISLAMABAD: The Federal Board of Revenue (FBR) is working, in collaboration with the World Health Organisation (WHO), to formulate a new policy to check the quality of tobacco in order to prevent the spread of various diseases, a Senate committee was informed on Tuesday.

FBR Member Inland Revenue Hamid Atiq Sarwar also told the Senate Special Committee on Tobacco that the new policy would be ready by the end of May this year.

Chairing a meeting, Senator Kalsoom Parveen stressed the need for the FBR to improve its performance to strengthen the national economy. She pointed out that the tobacco sector alone could generate taxes worth Rs150 billion.

Talking about the drop in revenue collection from the tobacco sector, Parveen said Pakistan was seeking financial assistance from other countries and may also go to the International Monetary Fund (IMF), therefore, the FBR needed to improve its performance.

Sarwar said most of the tobacco production came from Khyber-Pakhtunkhwa while most of the cigarette manufacturing plants were established in Azad Jammu and Kashmir.

He told lawmakers that the previous fiscal year saw a decline of Rs17 billion in revenues of Pakistan Tobacco Company (PTC). However, he insisted that the PTC was not involved in tax evasion, adding that local manufacturers were subjected to 33% duty.



Senator Parveen pointed out that revenue collection from the tobacco sector fell by Rs60 billion and asked the FBR to improve its collection from the sector. “By improving revenue receipts, we can improve the economy,” she added. Sarwar said the government was taking steps to curb the sale of illegal and substandard tobacco.

He emphasised that the aim of the new policy was to regulate the sale of cigarettes while all the illegal and fake cigarettes would be destroyed. He expressed hope that the new policy, which would be for a five-year period, would be prepared by May.



He pointed out that WHO and the health ministry had demanded an increase in taxes on cigarettes. “At present, the minimum tax is Rs33, but some cigarette packs are being sold at Rs25-30 in the market,” he added.

Giving breakdown of tobacco production, he said last year, 60 million kg of tobacco was produced while 10 million kg was imported. However, he added that tobacco companies bought 45 million kg and the rest of the quantity was unaccounted for.

Published in The Express Tribune, February 13^th, 2019.

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