ISLAMABAD: The Public Accounts Committee (PAC) has summoned the chairman of the Federal Board of Revenue (FBR) today (Thursday) after the board ignored its proposal to withdraw the third tier of taxes on cigarettes in the 2018-19 budget.

The FBR has retained the third tier and set aside stakeholder recommendations calling for the restoration of a two tier tax system, even though the PAC believed that the new system was causing low revenue collection from the cigarette industry.

Setting aside recommendations from the Ministry of National Health Services, the National Assembly Standing Committee on Finance and the PAC to increase the federal excise duty on cigarettes to Rs44 per pack, the FBR only increased the tax by 96 paisas per pack of cigarettes.

According to the proposed budget for the 2018-19 fiscal year, the FBR has also increased taxes by 6pc (Rs4.48) for the first tier of cigarettes and 6pc (Rs2) for the second tier.

A member of the National Assembly Standing Committee on Finance noted that the FBR collected just Rs87 billion from the tobacco industry during the ongoing fiscal year, compared to a target of Rs120bn.

The MNA called this a matter of great concern that cigarette production has increased by 100pc after the introduction of the third tax tier while FBR’s tax collection has fallen by 10pc during the ongoing fiscal year.

Pakistan is a signatory to the World Health Organization’s Framework Convention on Tobacco Control (FCTC).

The FCTC binds the government to increase taxes in order to reduce tobacco consumption in the country.

A PAC member speaking to the press in Parliament House said that the committee would take up issues related to future cigarette prices, consumption patterns, reasons for decreased revenue and health hazards posed by tobacco.

Published in Dawn, May 3rd, 2018