The tobacco industry performs tax reductions, a new level despite manipulative practices: SPDC
Karachi: The tobacco industry has placed two major requests before the government before the upcoming budget: the introduction of a third level of taxation with a reduced rate of RS2.525 for 1,000 cigarette sticks, and a reduction in current federal accuracy rights (Fed) from RS5.050 to RS3 800 for 1000 sticks, learned from multiple sources.
These requests arise at a time when industry is faced with a meticulous examination for the alleged manipulation of production data and tax evasion.
He revealed that, although tobacco production increased by 19.2% during the July-December period for the current financial year, compared to the same period during the previous financial year, Fed government income decreased by 2.4% and GST collection dropped considerably by 26.1%.
According to IQBAL, illicit (not imposed) trade is mainly motivated by locally manufactured cigarettes, which represent 21.3% of the market. In addition, smuggling cigarettes contribute 11.9% of the total consumption of cigarettes. These figures indicate that if illicit trade is a concern, it is significantly lower than the exaggerated affirmations made by the tobacco industry.
The SPDC results question the story often used by tobacco companies that higher taxes push consumers to smuggling or counterfeit products. Instead, the data suggest that the own practices of the industry contribute significantly to income loss and illicit trade.
As the budgetary season approaches, defenders of public health and budgetary experts warn that the performance of the tobacco industry could undermine both the objectives of the health policy and tax integrity. There are growing indications that the IMF could be inclined to accept the government’s proposals, a development that raises concerns about the fund that seems to be resting with the tobacco industry. If flexibility is granted, the tobacco sector could potentially earn an RS10 at 20 billion rupees per year, at the cost of a much higher health burden for the country, potentially ten times higher than the income provision.
