Business

The mystery surrounds Rs 33 billion cigarette scam by multinational firms

Aftab Ahmed

ISLAMABAD: No doubt credit goes to PTI government which exposed cartels of Sugar, wheat and IPPs who pocketed billion from the poor.  But, it is still mystery about the inquiry launched by National Accountability Bureau (NAB) one and half years ago into Rs 33 billion scam by multinational companies Philip Morris and Pakistan Tobacco Company (PTC).

These multinational companies had managed to revise structure of federal excise duty on cigarette which enabled it to pocket Rs 33 billion due to loss in government revenue.

Some quarters hope that present government of PTI would also take action against multinational companies for causing multibillion rupees loss as it took action against sugar, wheat and IPPs cartels.

Auditor General of Pakistan (AGP) had unearthed in special audit following direction of then Public accounts committee that these companies had caused a revenue loss of Rs 33 billion that went into pocket of these multinational companies.

Following the findings of auditor general of Pakistan, NAB had started inquiry against cigarette industry in October 2018.But it is still mystery what happened next.

Taking cognisance of the hefty decrease in tax collection, especially after the introduction of a three-tier tax system in May 2017, the Public Accounts Committee (PAC) and standing committees on finance and health had taken up the issue and discussed in detail the pros and cons of the three-tier tax structure.

The revised structure caused a massive decline of Rs33 billion in revenue collection from the tobacco sector – which is a major contributor to the national exchequer.

Similarly, PAC, on May 23, 2018, recommended a special audit by the Auditor General of Pakistan (AGP) of the significant drop in tax collection. The AGP revealed that one of the multinational companies included its popular brands in the lowest tax tier, which led to increase in sales and 50% reduction in taxes.

Think tanks, NGOs and the health ministry have written letters to the finance minister and asked for the revival of the old tax system for cigarettes in the country. Due to the introduction of the third tax slab, the federal excise duty was reduced from Rs33 to Rs16 per pack of cigarettes, which resulted in an increase in the production of cigarettes, they said.

Similarly, the turnover of cigarette manufacturing companies increased by up to 118% while the FBR could collect only Rs87 billion in taxes against the target of Rs120 billion.

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