ISLAMABAD: The Federal Board of Revenue (FBR) is due to explain the reasons behind the decreased tax collection from tobacco industry during the current and previous fiscal years before the Public Accounts Committee (PAC) of the parliament today (Thursday).
In March this year, FBR had admitted that the revenue collection on documented cigarettes further declined to Rs83.69 billion in the year 2016-17 as compared to Rs114.19 billion in 2015-16 and announced to take into account direct impact of changes in the federal excise duty (FED) on cigarettes on decrease in illicit trade of non-duty-paid cigarettes during 2017-18.
A well placed official source at FBR told Customs Today that taking cognizance of the issue, the Public Accounts Committee had asked the FBR to explain the exact state of affairs along with the reasons behind the decreased tax collection from the tobacco industry. To this end, FBR has made detailed presentations despite the neck bound engagements of the officials in the budget preparation related activities over the previous month.
The copy of letter notice shared with this scribe by the official received from the PAC by the FBR stated that the Public Accounts Committee would examine appropriation Accounts and Audit Report of FBR for the fiscal year 2015-16 and audit reports/ special audit reports for the fiscal year 2016-17.
“Moreover, the PAC will also discuss the issue of decrease in tax collection from tobacco manufacturing industry; therefore, the FBR chairman has been requested to kindly direct officer concerned to provide 50 copies of the briefing on the above issue to this secretariat well before the meeting,” the letter read.
The source further told Customs Today that the decline in revenue from the tobacco sector was result of a surge in demand for illicit cigarettes that were significantly cheaper than the legal industry; however, FBR had approved legislation to introduce a third taxation tier for Pakistan’s tobacco industry, which had reportedly improved the FBR’s revenue generation from the tobacco industry.
Therefore, the source said that FBR expects at least 20 percent increase in tax collection from tobacco industry, taking total figure to Rs 100 billion by the end of the current fiscal year. In the previous fiscal year, the government collected Rs 74 billion tax from this sector whereas in the fiscal year 2015-16 the total amount of Rs 111 billion was collected from tobacco industry.
The source further said that the FBR chairman along with his core team, Member Dr Muhammad Iqbal and a few others would explain the situation before the PAC today.
