NA told: Tobacco sector tax evasion touches Rs240bn mark

ISLAMABAD: The parliamentarians were informed during the National Assembly session that the tax evasion in the tobacco sector is Rs 240 billion, as only two multinational companies pay 99 percent of tax and all local companies pay only one percent of the remaining tax collection.

Commenting on the ongoing budget debate at the National Assembly, Society for the Protection of the Rights of the Child (SPARC) has observed that the data seems to be driven out of the myths that the multinational companies have long been creating to seek tax concessions.

A recent myth-breaking report by the SPARC has mentioned that after track and trace system has been put in place, volume of illicit trade in cigarettes has plummeted down to 15 percent.

In addition, Mukaram Jah Ansari, Head of Pakistan Customs (Operations) at the FBR, has recently appreciated his teams for seizing huge quantities of smuggled cigarettes of international brands in huge quantities from Quetta and Lahore.

In Quetta, the FBR states that it has seized Rs 102.5 million worth of smuggled cigarettes and in Lahore it has seized Rs 78 million worth of smuggled cigarettes. FBR Member Customs Operations Ansari has tweeted appreciation for his teams. Similarly, health activists have appreciated Prime Minister Shahbaz Sharif’s directives to curb down illegal trade of tobacco products in Pakistan.

In a press release shared by SPARC on Thursday, the health activists stated that the Federal Board of Revenue’s Track and Trace system has kept illicit trade from going above 15%. This system should be implemented in all companies to achieve further benefits. The activists also mentioned that during pre-budget seasons, tobacco industry uses blown up percentage of illicit trade to influence the policymakers from raising taxation according to the rate of inflation.

Malik Imran, Country Head, Campaign for tobacco-free kids (CTFK), mentioned that tobacco induced disease causes an annual economic burden of 615 billion which is 1.6% of Pakistan’s GDP.

He said that an industry which is causing such unprecedented level of damage to public health and economy, brazenly claims that any damage control move is against Pakistan’s interest. Imran mentioned that every budget season, tobacco industry uses the illicit trade excuse to ensure that tobacco taxes are not increased.

This is a cover used by tobacco industry to divert people from the underreporting. It is accused that the companies allegedly under-report their production and then sell their non-reported products in the illicit market, causing billions of loss to the national exchequer. He quoted findings of a latest research on illicit cigarette Pakistan which revealed the percentage of illicit packs of cigarette was around 15 percent, he added.

Copyright Business Recorder, 2023