Senate panel concerned over FBR’s failure to monitor tobacco industry

ISLAMABAD: A Senate panel on Thursday raised concerns over the performance of Federal Board of Revenue (FBR), which has failed to effectively implement the Track and Trace system in the tobacco industry.

The meeting of the Sub-Committee of Senate Standing Committee on Commerce, chaired by Senator Sarmad Ali, was held on Thursday. The Ministry of Commerce and a private organisation, Policy Research Institute of Market Economy (Prime), briefed the committee on issues related to tax evasion, counterfeit goods and smuggling. Senators Faisal Saleem Rahman and Zeeshan Khanzada attended the meeting.

The convener of the subcommittee expressed concern over Pakistan Customs’ inability to curb the smuggling of cigarette brands. He directed that all relevant stakeholders be summoned to the next meeting.

The committee was briefed on the core functions of Prime and informed that it was essentially a think tank established to assist government organisations in advancing policies for open trade and economic efficiency in Pakistan through research.

Prime Executive Director Dr Ali Salman highlighted the issue of illicit trade in tobacco, medicines and other goods. He stated that such activities are predominantly carried out in Khyber Pakhtunkhwa and Azad Jammu Kashmir, particularly in tax-free zones.

He added that small units operating in these areas often evade taxes and generate profits through illegal means.

He also discussed the rampant smuggling of international cigarette brands, which are sold in the market at extremely low prices, without taxes or health warnings.

Senator Zeeshan Khanzada raised the issue of tobacco smuggling and suggested holding a thorough debate to address the problem. He emphasized that it was a matter of national interest and proposed that the committee engage representatives from multinational companies, local manufacturers, Tobacco Growers Association, consumer rights groups, Pakistan Tobacco Board, Ministry of Health, DG Track and Trace (FBR), and IPOR to devise a holistic and sustainable solution.

The Ministry of Commerce and Prime’s executive director stressed the need to revisit excise taxation policies, strengthen enforcement capacity, improve inter-provincial coordination, implement border control reforms, establish spot checkpoints at retail outlets, and introduce new provincial-level legislation to regulate retail sales.