No change in advance FED on tobacco sector

Updated June 10, 2020

Email

Private sector's proposal to increase duty from Rs10 to Rs500 turned down after considering risk and tax burden on tobacco growers, says FBR. — Dawn/File
Private sector's proposal to increase duty from Rs10 to Rs500 turned down after considering risk and tax burden on tobacco growers, says FBR. — Dawn/File

ISLAMABAD: The Federal Board of Revenue on Tuesday said the advance Federal Excise Duty (FED) on tobacco leaf would remain intact at Rs10 for the fiscal year 2020-21.

The FBR informed National Assembly Special Committee on Agricultural Products, led by Speaker Asad Qaiser, that the private sector had proposed to increase duty from Rs10 to Rs500.

The FBR said the proposal was discussed with relevant stakeholders. However, after considering the risk and tax burden of advance duty on tobacco growers, the FBR discarded the proposal.

After analysing the evidence and potential negative im­­pacts on farmers, the FBR decided that the current regime for advance FED on tobacco leaf would remain unchanged.

Qaiser said the FBR should increase taxes on cigarettes and imported tobacco as Pakistan was a signatory to the World Health Organisation Framework Convention on Tobacco Control. He recommended the FBR to strengthen enforcement mechanism to prevent tax evasion and smuggling and advised the board to consult subsistence farmers before recommending any tax changes.

He asked the FBR to understand the economic structure of the tobacco growing districts with small landholdings and single cash crop as the source of livelihood before analysing tax policy on tobacco crop.

Tobacco growers, who were also present at the meeting, informed the panel that crop provides livelihood to more than 35,000 households. They said that tax policies of the past badly affected their interests.

They emphasised that policies obsessed with mere numbers without considering its impact on poverty of the farming community may further exacerbate their distressed financial conditions.

Published in Dawn, June 10th, 2020