FBR plans to collect 150 billion from cigarettes industry

• FBR estimated the collection from the cigarette industry at 150 billion rupees during the ongoing fiscal year 2019-2020.
• We will collect more taxes to the tune of Rs 150 billion including 140 billion from the two major tobacco companies and the remaining 10 billion from illicit tobacco, says FBR’s Dr. Hamid Ateeq Sarwar.

The new economic team of PM Imran Khan abolished the three-tier system of imposing the taxes, the system was imposed, reportedly, during the tenure of the past ruling elite. FBR’s Dr. Hamid Ateeq Sarwar has said, reported by The News International, that this policy was aimed at achieving two prime objectives: reducing the tobacco, and increasing the revenues.

FBR has collected 110 billion PKR in shape of Federal Excise Duty (FED) and General Sales Tax during the outgoing fiscal year of which 90 billion was collected as FED, he added.

FED is the tax levy that is imposed on the manufacturers and industrialists fear that the abolishment of the three-tier system would make it difficult for the tax body to reach the estimated target of 150 billion PKR.

The FBR estimated the collection from the cigarette industry at 150 billion rupees during the ongoing fiscal year 2019-2020 against the total collection of 110 billion in the past fiscal year.

“We will collect more taxes to the tune of Rs 150 billion including 140 billion from the two major tobacco companies and the remaining 10 billion from illicit tobacco as we’ve installed our track and trace system to jack up the revenue collection,” said Dr. Hamid Atiq Sarwar – FBR’s member of Inland Revenue Department.

The condition of track and trace system has been put forward by the international lender (IMF) and the system would become operational by March next year, he said, adding that the formal industry increased its prices so that the desired tax collection would be implemented.

He also stated that the FBR has devised a 6-year plan out of which the first three years are to increase the revenue generation and efforts would be made to curb the tobacco consumption during the remaining three years of its plan.

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The tax rate was brought down on Green Leaf Thrashing Plants from 300 rupees to a bare minimum of 10 rupees per kilogram during the last budget. He also said that the FBR has decided to ensure strict compliance during the monitoring at Mangla to control the smuggling of cigarettes from Azad Jammu and Kashmir and army was also agreed to extend the assistance in curtailing the smuggling from Sindh to Punjab.

Do you think that the exclusion of third-tier would help tax collection up to 150 billion PKR during the ongoing fiscal year? Also, tell us that is this decision of the government in line with the documentation of economy – the stated agenda of FBR?