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June 19, 2019

Farmers fear tax on tobacco to bring huge losses to growers


June 19, 2019

PESHAWAR: The proposed Rs300 tax per kilogram on tobacco by the Federal Bureau of Revenue (FBR) is feared to render a large number of farmers and industrial workers jobless and bring huge losses to the growers and those associated with this cash crop in Khyber Pakhtunkhwa, the farmers complained.

Farmers’ representatives and their rights organisations have appealed to Prime Minister Imran Khan and Minister of State for Revenue Hammad Azhar to take note of the ongoing unrest among the farmers and withdraw Rs300 tax per kilogram on tobacco.

It was to the utter surprise of the farmers when the FBR proposed this heavy tax on tobacco as after a lengthy meeting held between the government and farmers’ representatives in Islamabad on June 12 the government had agreed to withdraw the tax on tobacco and rather impose it on smokers.

“We don’t understand who is running this country and who is dictating our rulers. A high-level government delegation comprising Minister of State for Revenue Hammad Azhar, Senator Usman Tarakai, MNA Sher Akbar Khan, KP Local Government Minister Shahram Khan Tarakai agreed with us that the FBR would impose the tax on smokers,” recalled Abrarullah, president Mehnat Kash Labour Federation.

However, he complained that FBR had again proposed the same tax on tobacco in the budget, which Minister of State Hammad Azhar presented in the National Assembly.

Besides Abrarullah, other representatives of farmers in KP, including Rizwanullah, president, Kisan Board Pakistan, Haji Abdul Nabi Mohmand, president Sarhad Agricultural and Rural Development Organisation and Haji Niamat Shah, president Anjuman Tahaffuz Kashtkaran also lodged their protest over the tax on tobacco and feared it would render thousands of people jobless in KP.

According to farmers, a well-organised effort is being made by influential people in the country to force the farmers in KP to either stop growing tobacco or sell the produce to two multinational tobacco companies in Pakistan.

Abrarullah alleged that two multinational tobacco companies were behind the imposition of this new tax on tobacco to establish their monopoly.

He said the government added Rs300 tax on tobacco after senior officials of the multinational tobacco companies met some top officials a day before the budget.

Interestingly, the farmers had to sell the crop for Rs130 per kilogram to the tobacco companies but they would have to pay Rs300 tax per kilogram.

Abrarullah said Pakistan used to produce 140 million kilograms tobacco till 2007. Out of this, 100 million kilograms tobacco was produced in KP alone.

But, he said, a major decline was reported after 2010 when a multinational tobacco company landed in Pakistan and purchased other companies, including Lakson Tobacco Company, reduced their staff, prices and purchasing centres.

Presently, he said, 60 million kilograms of tobacco is produced in the country and 98 per cent of the crop is cultivated in KP.

According to farmers, there were more than 22 small companies in the province that used to

pay better prices to farmers than other major companies and then their purchasing centres were located in villages where they could easily sell their produce.

He felt that a plan has been made to shut all small tobacco companies and leave the farmers at the mercy of multinational companies. “I wish Prime Minister Imran Khan could learn about the role of the multinational companies. They force farmers to purchase their pesticides and burning wood on 30 per cent extra than the market rate if they wanted to sell their produce to the same companies,” president of the farmers’ rights group said.

He said the tobacco is the only crop that can be used in cigarettes and lose it quality if not sold in time. An elderly Haji Niamat Shah said the farmers cannot afford to store tobacco crop, saying the government wanted the farmers to stop producing the crop or sell it to certain multinational companies at their rates.

“The government is earing Rs2 billion as tax from tobacco in Khyber Pakhtunkhwa. This is not true that the companies don’t pay taxes. The plan is to impose tax on crop so small companies and local businessmen don’t survive,” he complained.

In KP, the best tobacco crop is produced in Buner and Mansehra, followed by Shergarh in Mardan and Charsadda and Swabi districts.

However, maximum tobacco crop is produced in Swabi district, which is not only a cash crop but the lone source of livelihood for millions of households. Also, the tobacco produced in KP is stated to be less harmful than that of Punjab.

In Punjab, the crop used to be produced on small scale, but was allegedly more harmful for health than the tobacco produced in KP, said Abrarullah.

According to Abrarullah, 11,34,000 farmers and 15,000 industrial workers would become jobless if the government didn’t withdraw tax from tobacco crop.

The farmers complained that the Federal Excise Duty had already affected production of the crop and the new tax would compel farmers to stop its cultivation.

National Assembly Speaker Asad Qaiser, who also belongs to Swabi district, has reportedly been making all-out efforts to convince FBR and withdraw the new tax on tobacco growers. He had appealed to FBR that tobacco growers should be given relief in the budget. The speaker had a task force for seeking suggestions for resolving the issue and to protect the rights of the tobacco growers.