ISLAMABAD: The Federal Board of Revenue (FBR) is going to ‘revise’ policy on tobacco taxation in budget (2017-18).
The Board considering whether merely a raise in Federal Excise Duty (FED) rate on cigarettes in budget would increase revenue from documented sector and decrease illicit trade of non-duty paid smuggled/counterfeit cigarettes.
The ongoing budget finalization exercise is seriously considering some policy issues on cigarettes. Firstly, it is being examined that heavy taxation on cigarettes is the only way to generate additional revenue from tobacco sector. Moreover, burdening the documented companies would result in increase in FED from this sector. However, the FED on cigarettes would be revised during the upcoming budget, sources added. Secondly, whether the FBR has ever asked the law enforcement agencies to give data of smuggled cigarettes confiscated by the LEAs?
Thirdly, whether the FBR has directly interacted with the tax authorities of Azad Jammu and Kashmir (AJK) to check why the manufacturers in Mardan have shifted their investment to AJK. When tax laws in Mardan and AJK are the same, what is the incentive available to the manufacturers of cigarettes in Mardan to move their entire setup to AJK. Without incentive of tax evasion, why manufacturers in Mardan have shifted their investment to AJK? Smuggled cigarettes are used by elite class and mostly available in markets of urban centers. Till now, no consolidated efforts have been seen to check these smuggled items.
