ISLAMABAD: Federal Board of Revenue (FBR) Chairman Tariq Mahmood Pasha said that introductory slabs of the tax rates on cigarettes had produced positive results in overcoming the sale and manufacturing of illegitimate cigarettes in the country.
FBR has collected Rs 55 billion tax from the tobacco sector in first ten months of the current fiscal year and hopefully, tune of revenue collected from tobacco industry to touch the figure of Rs 92 billion by the end of current fiscal year
While explaining the reasons for the reduced revenue collection from tobacco industry in the previous fiscal year before the Public Accounts Committee (PAC) of the Parliament, Pasha explained that third tier of tax slab was introduced through finance bill last year just to reduce the share of illegal manufacturing and sale of cigarettes. Actually, the market share of illegitimate tobacco sector had mounted higher than the legitimate sector and it had also affected the revenue collection badly.
“Resultantly, production of international cigarette brands reduced to half of the tune in 2016 almost 28 billion sticks from 54 billion sticks in fiscal year 2015,” he said adding that in result of reduction in the tax rates on the cigarettes, the production of cigarettes by these brands had touched the figure of 48 billion sticks in first nine months.
Therefore, he said that FBR charged Rs 1 billion FED on production of one billion sticks of cigarettes at the rate of one percent per as sale and revenue collection from this sector has increased by 25% in first nine months of the fiscal year.
“Revenue downed from Rs114 billion in 2015 to Rs84 billion in 2016 from the tobacco industry and it could further be lowered to Rs72 billion in the current fiscal year if we had not introduced the reduced rates of taxes on cigarettes,” he asserted.
He said that loss of revenue of Rs 22 billion; (from Rs114 billion to Rs92 billion) would be overcome in next two fiscal years as tune of revenue collection from tobacco sector would be retained Rs 114 billion in 2020.
