It is relevant to bring out a statistical profile of the indigenous tobacco grower/industry of Khyber Pakhtunkhwa. According to the statistics published by Pakistan Tobacco Board (PTB), area under tobacco growth is only .27% of the total irrigated area of Pakistan. While it is a source of income for about 1.2 million people, about only 75,000 farmers are involved in tobacco growth. According to the PTB report there are 50,000 labour force employed in 21 different factories. While being identified in the lower slab of FBR taxation regime, the tobacco tax returns were PKR 77 billion in the fiscal year of 2013-2014. However, if there are instances of tax evasion it’s a reflection on the law enforcement agencies and not on the petty farmer or the small manufacturers of these products.
As a result of the foreign multinationals in the tobacco world the farmers are getting a very poor deal for their product. According to the statistics of the PTB, the world prices for FCV tobacco are indicated below: The above reveals that the best vintage tobacco grown in Pakistan sadly gets the lowest price in the world. Is there anyone to rationalize this pricing structure as per world price, or will this unfair solicitation, led by the MNCs, of the farmers of Pakistan continue to misappropriate their well deserved hard earning.
It is important to point out that the large scale smuggling of imported cigarettes has now become common place. The duties and taxes imposed by the government on imported cigarettes are being evaded through manipulation of records, and these high quantities of smuggled cigarettes are brought into Pakistan to be sold with even higher profits margins for the multinationals. The smugglers from Afghanistan and Iran are not alone in this deed but they in fact backed by foreign owned manipulators present in tobacco industry. As reported in UK Times in November 2014, recently one of these groups has been fined for not complying with Europe antismuggling law.
Pakistani government authorities need to be more prudent with the matter of these in order to curb this illicit trade and impose heavy duties and fines on the MNC whose products are sold in the Pakistani markets through the umbrella of local representatives/ smugglers. In conclusion, one can safely say that the big players of cigarettes industry, who hold over 95% share of the cigarette industry, need to pay more taxes rather than the nascent tobacco industry of Pakistan, who are already taxed to the hilt.
Ali Imam Islamabad