ISLAMABAD: While probing the multi-billion tax evasion scam of tobacco sector, a special committee of the Senate on Wednesday directed the Federal Board of Revenue (FBR) to equate tax incidence on imported and locally produced tobacco.

The Senate Special Committee on Causes of Decline in Tax Collection of Tobacco Sector – led by its convener Senator Ms Kalsoom Parveen – was informed that the government has imposed Rs300 per kg on tobacco exports in the last budget while on imports it collects only Rs22 per kg.

Senator Dilawar Khan informed the committee that the disparity in duty structure has badly impacted the production of tobacco in districts Mardan, Swat and Swabi, respectively. He claimed that due to excessive taxations tobacco business was almost coming to a standstill.

The committee recommended increase in duty on import of tobacco to the FBR as well as a review of the taxation mechanism on export of tobacco.

FBR Chairman Jehanzeb Khan informed the committee that revenue collection from tobacco sector edged up to Rs88.54 billion in 2017-18 from Rs74.107bn over the previous year. Revenue collection from the tobacco sector was Rs111bn in 2015-16.

Mr Khan said lower collection was mainly due to a drop in cigarette production. However, he said, that revenue collection in the current fiscal year will cross Rs100bn by end June 2019 while the next year’s target from the sector is Rs120bn.

Senator Parveen asked the FBR officials to give a briefing in the next committee meeting over the Rs40bn drop in revenue collection from the sector. The meeting recommended carrying out an audit of the sector and submitting a report to the committee within a period of one month.

The FBR informed the committee that there was no link in the decline of revenue from tobacco sector due to services of relatives of tax officers employed by different multinational cigarette manufacturers in Pakistan.

In the last meeting, the committee had urged the FBR to share names of top officers who were allegedly obliged by employing blood relatives. Instead of sharing names of those officers, the FBR informed the committee that no individual can influence the policy formation which has been formulated in consultation with all stakeholders.

Published in Dawn, November 29th, 2018