WHO asks FBR to jack up taxation on tobacco sector

ISLAMABAD: The World Health Organization (WHO) has asked the FBR for further jacking up taxation on the tobacco sector to align it with the rate recommended by the WHO.

It was argued by a visiting WHO team that Pakistan was still lagging behind in imposing taxation on tobacco related to the standard recommended by them so there was still room for further hiking the taxation rate. But FBR high-ups argued that they were facing the challenges of effective enforcement as only multinational companies were paying the Federal Excise Duty (FED) and other taxes while others preferred to remain untaxed through illicit, counterfeit and smuggled ones. The FBR high-ups said they were making plans to find out ways for taking stringent measures to strengthen enforcement through possibility of creating dedicated workforce. “Different plans are under consideration and the FBR may come up with a proposal to create dedicated workforce with mandate to ensure enforcement in all nook and corners of the country,” said official sources.

In the last fiscal year, the FBR hiked up FED by 200 per cent through taxation measures undertaken twice after which the multinational giants raised hue and cry that they had shrunk whereby the share of illicit business had gone up and even surpassed. If the FBR further hikes taxation rates without effective enforcement, it might result in making the two giant companies business model financially unviable. The FBR is making plans to come up with enforcement measures during the coming budget for 2024-25 to plug leakages. However, it is yet to see how the multilateral creditors such as the IMF and the World Bank would recommend the FBR to move ahead with taxation on the tobacco sector. The FBR also remained unable to make Track and Trace System (TTS) effective and fully functional.

An official announcement made by the FBR on Tuesday said a delegation of the World Health Organization (WHO) comprising Roberto Iglesias, Consultant, and Santiago Carrillo, expert on Track & Trace, called on Chairman Federal Board of Revenue Malik Amjed Zubair Tiwana at the FBR Headquarters on Tuesday in Islamabad. Member IR (Operations) Mir Badshah Khan Wazir was present.

During the meeting, matters pertaining to tobacco taxation were discussed. They also deliberated upon operational challenges in implementation and enforcement of Track and Trace System for the tobacco sector to eliminate the menace of illicit trade of tobacco.