KARACHI 23rd june: The imposition of Rs300-per-kilogramme levy on tobacco processing at the factory level has been welcomed by the ciggerette manufacturing companies and has asked the government not to take the tax back under the influence of illegal cigarette manufacturers.
“The tax under consideration will not be charged from farmers, but from the cigarette manufacturers,” Pakistan Tobacco Company (PTC) Senior Regulatory Affairs Manager Noor Aftab told The Baaghitv correspondent.
“The legitimate tobacco industry supports the Rs300-per-kg adjustable advance tax. This measure assists in documentation of the industry,” he said. Illegal and tax-evading cigarette manufacturers are spreading rumors that farmers will be taxed, which is incorrect. They are spreading rumors in an attempt to influence and force the government to withdraw the tax, which basically discourages the production of tax free cigarettes.
The federal government has proposed the hike in the (FED) to Rs300 per kg on green leaf threshing (GLT) at cigarette producing plants in the budget for FY20. “The tax was introduced at Rs10 per kg in October 2018 and it remains an adjustable tax at the cigarette production level,” Aftab said.
He added that there were only two legally registered cigarette manufacturers in the country who have a market share in total sales of cigarettes was 60% while they paid 98% of the total tax collected from the sector.
On the contrary, there are some 21 non tax paying cigarette manufacturers who have a market share of about 40% and they pay only 2% of total taxes.
An industry source, stated on condition of anonymity, said a few members of national and provincial assemblies as well as sitting ministers are involved in the illegal production and sale of cigarettes in the country. “A big government figure is pressurising the Federal Board of Revenue (FBR) to withdraw the tax,” he said, adding that FBR officials, however, had refused to withdraw it”.