Prime Minister House. After displaying warning that smoking is dangerous for health, the subsequent line reads: “Special Crested Filter Cigarette….Especially Manufactured for Prime Minister’s House.” PM Office logo follows that.
Interviews with tobacco manufacturers suggest they are bound to follow the law as tax exemption is granted by the state and the companies don’t have to bear any burden of this facility.
A high-brand tobacco manufacturer sponsored an advertisement in Wednesday’s newspaper with a headline: ‘Tobacco tax evasion.’
Without naming a particular manufacturer, however, hinting towards low-brand cigarettes, the advertisement said that they are ‘depriving Pakistan of billions that could be spent on the development of the nation as the selling price is way below the government mandated duties and taxes.’
Federal Board of Revenue officials agreed that tax evasion at large scale is being carried out by such manufacturers.
Ironically, the government is running a campaign to discourage smoking on one side and giving exemption to the constitutional office holders to continue smoking on the other.
Tobacco is one of the major revenue sources for the government as an estimated Rs120 billion is collected under this head. Again, tax evasion in this sector is rampant; mostly carried out through local brands available on cheap rates.
One brand generally consumed by the low income group, for example, has Rs34.39 tax duty and the printed price on its packet has been described Rs55 but it’s available in Rs30. Another brand displays a price of Rs45 but is sold at Rs20.
The brands notorious for tax evasion are less known in elite circles but in hot supply among poor sections of the society. Included among them are Kisan, Bridge, Cricket, Marvi and Winster. Federal Board of Revenue has collected video proof about their sale at rates lower than that mentioned on the packets and written to provincial authorities for launching crackdown against them.
“The market share of these tax-evaded brands is increasing at the expense of the tax compliant manufacturers,” said an FBR official dealing with this trade.
Asked why FBR is not setting example by withdrawing exemptions granted to the top authorities, the official said it is the duty of policy makers who themselves are enjoying this facility.