Tobacco growers seek incentives, low tax rates

MARDAN: A representative of the tobacco growers on Saturday asked government to provide incentives and lower taxes on tobacco production to give relief to the farmers.

“Tobacco contributes to federal exchequer in shape of sales tax and federal excise duty (FED) over Rs114 billion per year,” said Niamatullah Shah Roghani, vice-president of Anjuman-e-Kashtkaran Khyber Pakhtunkhwa while talking to The News.

He added that tobacco farming was a good means of earning, but unfortunately increase in taxes had made it almost impossible for poor farmers to continue its cultivation.

Niamatullah added that the government had imposed federal excise duty Rs10, advance withholding tax Rs8.8, federal government cess Rs3.67 and provincial excise cess Rs5 on per kilogram of tobacco.

He added that all these taxes were deducted from the farmers in tobacco prices by tobacco companies.

“This was the reason that in 2017 there was no competition in the market and tobacco prices were even below the production cost,” he added.

He said that after agitation by the farmers, the Pakistan Tobacco Board and other regulatory bodies forced the companies to buy the tobacco but due to high taxes and the price remained lower than production cost.

“The government allowed the companies to bring down prices of cigarettes and this was reason the farmers didn’t get a good price which resulted in billions of rupees loss to them, besides reduction in price of third slab’s cigarettes,” he added.

Niamatullah added that the Government of Pakistan violated the Framework Convention on Tobacco Control (FCTC) signed with the World Health Organisation (WHO).

The FCTC was meant to discourage smoking by increasing the price of cigarette and taking other measures, he said, adding, the agreement was violated by decreasing the price of cigarette.

Niamatullah demanded the government to declare tobacco a normal crop like other crops in terms of taxation.

He also demanded that 5 percent advance withholding tax, FED on tobacco leaf Rs10 per kg and federal government cess Rs3.67 per kg on tobacco leaf must be included in federal excise duty on cigarette production.

Niamatullah added that tobacco farmers in Swabi, Mardan, Charsadda, Nowshera, Buner, Swat and Mansehra had been suffering due to the apathy of the government.

He asked the government to meet their demands or else they would be compelled to start agitation all over the province.