Blowing hot: Federal, K-P govts ignite tobacco conflict

Centre resisting provincial govt’s demand to hand over PTC control after 18th amendment.

ISLAMABAD:

The federal and Khyber Pakhtunkhwa (K-P) governments are at loggerheads after the former turned down the K-P’s demand to hand it over the control of Pakistan Tobacco Board (PTB) under the 18th constitutional amendment.

The K-P government is of the view that under the said amendment, agriculture has become a provincial subject as tobacco is a cash crop like wheat, sugar cane and cotton.



Three other tobacco producing provinces – Punjab, Sindh and Balochistan supported the demand made by the K-P soon after the passage of the landmark 18th constitutional amendment.

After federal government’s refusal the K-P is trying to take up the matter to the Council of Common Interest (CCI) for more than a year.

“However, the bureaucratic hurdles in ministry of commerce and the PTB have made it difficult for the K-P to place the issue before the CCI,” said Provincial Secretary for Agriculture Hussainzada.

The K-P is now willing to compromise on its demand and has assured ministry of commerce that it would give up it right of tobacco export to the ministry.

“The PTB may be restricted only to the export and import of tobacco and its products, which is the exclusive power of the federal government and enlisted in the federal legislative list,” said the provincial chief secretary in a letter to the ministry of commerce

The K-P presently produces over 80 million kilogrammes of export quality Viginia tobacco and has the potential of growing more than 300 million kilogrammes, which will triple Central Excise Duty and Sales tax collection and will also generate additional foreign exchange from the tobacco produced, said the K-P Chief Minister Pervez Khattak in a fresh summary presented to the federal government while seeking a CCI debate on the issue.

“After the 18th amendment, the subject of agriculture was devolved to the provinces, whereas tobacco, which is the most important revenue generating crop of the province, is still under the control of the federal government,” said the summary.

It further said that due to lack of proper attention towards the crop development and the PTB authorities’ and ministry of commerce’s indifferent attitude towards the growers, the cultivation of this crop were reducing day by day.

According to the PTB documents, the K-P produced over 83,370, 000kg of tobacco during 2012-13 out of which 80% was produced in district Swabi only and that too of export quality.

While refusing the demand, Ministry of Commerce Joint Secretary Shafqut-ur-Rehman, in a letter to the provincial secretary agriculture, admitted that the federal government collected more than Rs 60 billion as the federal excise and sales tax.

However, the PTB chairman Capt Jamil Amjad told The Express Tribune that the amount to be collected was estimated at Rs70 billion for the current fiscal year. Federal government is of the view that Federal Excise and Sales Tax are being collected on the finished goods –cigarette but not on the tobacco crop.

The joint secretary further said cigarette manufacturing units of the two major tobacco companies, Pakistan Tobacco Company and Philip Morris Pakistan (Pvt.) limited, which paid 90% of the sales tax and excise duty were located in Punjab and Sindh and the excise and sales tax being paid by these cigarette companies was charged to the consumers scattered all over Pakistan.

The provincial government, however, vehemently rejected the stance by the joint secretary and said that Pakistan Tobacco Company was located at Noshehra since long.

Published in The Express Tribune, December 23^rd, 2013.