ISLAMABAD: Federal Board of Revenue (FBR) has informed the Senate finance committee that FBR is in process of rationalizing the duties and taxes on the tobacco sector and has hired the consultants in this regard, whereas other measures were also put in place to check the smuggling of cigarettes.
The committee also unanimously proposed 10 per cent increase in the salaries of government employees due to increasing inflationary impact on an ordinary person.
However, the officials of the Ministry of Finance opposed the suggestion due to the mounting fiscal deficit. Committee has directed the Ministry of Planning Development and Reforms to ensure the appropriate release of funds allocated for the construction of small dams and water conservation projects under the Public Sector Development Programme (PSDP) for the financial year 2018-19.
The committee met with Senator Farooq H Naek in the chair and discussed the recommendation on the Finance Supplementary (Second Amendment) Bill, 2019.
Senator Kalsoom Parveen told the meeting that tobacco growers and industry in the country were facing problems as Federal Excise Duty (FED) of Rs300 per kg was imposed on the commodity, which had forced the industrialists to shut down their businesses. She continued that the tobacco sector was contributing about Rs4.5 billion in terms of revenue and each unit was also providing livelihood to 100 to 150 people, adding that “tax burden has crippled the sector badly”. Meanwhile, the Federal Board of Revenue’s member apprised the committee that domestic tobacco production was recorded at 70 million kg annually and out of the total production of the commodity, 10 million kg were exported. He said that two major multinational companies, including Philip Morris Pakistan and Pakistan Tobacco Company, were the major buyers of domestic produce, adding that a large quantity of the output was smuggled to Azad Kashmir for value addition, which caused revenue losses.
He said that in order to check the smuggling of tobacco and penetration of non-duty paid cigarettes in the domestic markets, Rs300 per kg duty was imposed on domestic tobacco.
He added that domestic produces were only contributing one percent in total revenue whereas the rest of the amount was paid by the multinational companies. Senator Dilawar Khan asked the FBR to rationalize the SRO 1149 to protect the local industry and attract the foreign investment as well as facilitate the tobacco growers across the country. Meanwhile, the representatives of the State Bank of Pakistan informed the committee that Islamic banking was growing rapidly, as about the 2,850 bank branches and 22 institutions were offering Shariah-compliant financing products. Senator Ayesha Raza Farooq, Dilawar Khan, Talha Mehmood, Imamud Din Shouqeen, Mian Muhammd Ateeq Shaikh, Anwarul Haq Kakar and Sherry Rahman attended the meeting.
