Turnover of tobacco firms increased amidst tax cuts
Even though tobacco and its associated products are known to kill up to half of its users, the country has moved to cut excise duties on the products which have gone on to record a big jump in turnover.
This was stated by Pakistan National Heart Association (PANAH) General Secretary Sanaullah Ghumman in a statement on Thursday.
He said that the profits of tobacco companies in the country are rapidly increasing. “It clearly shows that the number of smokers is rapidly increasing in the country, resulting in a corresponding increase in the burden on the health infrastructure and increased annual deaths,” he regretted.
Ghumman also alleged that the major tobacco manufacturing companies in Pakistan are very smartly evading taxes in joint help with the Federal Board of Revenue’s (FBR) authorities. He added these companies present baseless and factually incorrect data to the public and policy makers to benefit their shareholders.
The three big tobacco companies, two multinationals and one local manufacturer, have posted massive quarterly profits and paid millions of rupees to their local and international shareholders while tax collection on the products remain stagnant.
The data shows that Philip Morris (Pakistan) Limited has reported a 53 per cent yearly growth in gross turnover for the post-budget quarter ended September 30, 2020 to Rs8.2 billion. This is presumably due to higher number of cigarette packs sold in the quarter.
The net turnover, however, had a much bigger jump of 103 percent year-on-year to Rs3 billion, as the FED rate (equal to share of excise duty in gross turnover) decreased from 52 percent in Jul-Sep 2019 to 45 percent in Jul-Sep 2020.
The market leader Pakistan Tobacco was also not much forthcoming in its latest directors’ review about the superb growth that this player has also seen in the latest quarter. For context, in the Jul-Sep quarter, the company scored a strong gross turnover growth of 27 per cent and net turnover growth of 41 percent year-on-year.
Published in The Express Tribune, December 4th, 2020.