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June 12, 2020

Senate committee to examine low revenue from tobacco industry


June 12, 2020

Islamabad : Senate Chairman Muhammad Sadiq Sanjrani has asked standing committee on Finance to discuss as to why Federal Excise Duty (FED) on cigarettes was not increased by the authorities against the recommendation of the federal cabinet and ministry of health.

Barrister Mohammad Ali Saif had raised the issue in the Senate and said federal cabinet had proposed the Federal Board of Revenue (FBR) last year and ministry of health on several counts but no action was taken in this regard.

He said that the FED on cigarettes in Pakistan is very low and powerful multinational tobacco companies were the stumbling blocks in this regard.

He said the matter “almost amounts to criminal negligence” and be referred to a standing committee where FBR and health ministry officials should be questioned about actions taken by them,” the senator said.

He also urged the Chairman to probe the matter further as government officials were allegedly working hand in glove with the multinational tobacco companies.

“Relatives of former FBR chairman Tariq Paha are designated by the Pakistan Tobacco Company,” Saif said while adding, how such officials can take independent decisions and actions against powerful lobbies.

Multinational companies have very strong “tentacles” and those who raise their voice against them face the music.

“I’m sure I will soon receive a notice form the FBR after speaking on this issue. I will share that with you when I get one” he said.

He said that the government collected revenue of Rs90 billion from the industry with FED rate of 17.5 during 2012-13. The government collected Rs110 billion when rate was increased to 33 in 2018-19.

There are reports that multinational companies are themselves involved in smuggling of cigarettes that is inflicting the national exchequer losses over Rs25 billion every year, he said.

The senator referred to a report of Pakistan National Heart Association (PNHA) and said more than 153,000 people die every year in Pakistan because of tobacco consumption. At least 10.7 percent young adults are smokers despite the fact cigarettes are the cause behind 11 per cent deaths.

“Use of cigarette is much bigger an issue than what we are facing in these days in the form of coronavirus,” he said.

He said Pakistan is also signatory to Framework on Convention on Tobacco Control under which the government is supposed to discourage tobacco consumption in the country by increasing taxes and prices.

The senator said that Pakistan Tobacco Company (PTC) regulates two cigarette brands including Marlboro and Benson & Hedges. They are earning billions of rupees every year and showed their profits have doubled in last five years.

But when we look at revenue it is still the same as was five years ago, he said.

He referred to a 2019 report on cigarette price comparisons in the world and said, price of a Marlboro pack in Australia is $20, $18 in New Zealand, $2.20 in Russia whereas in Pakistan the price is less than $1.

Saif said that multinational companies were selling their brands, not paying taxes to the government and playing havoc with the health of Pakistanis.