ISLAMABAD: Officials of the Pakistan Tobacco Board (PTB) have urged Finance Minister Senator Muhammad Aurangzeb to reconsider the federal cabinet’s decision to wind up the organization and transfer its key functions to the provinces.
In a letter addressed to the Finance Minister, PTB officials strongly condemned the decision, calling it unconstitutional and illegal.
According to the letter, the cabinet’s decision to dissolve the PTB and transfer its essential functions to provincial authorities is not in accordance with the law.
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The PTB, established under the Pakistan Tobacco Board Ordinance, 1968 (Ordinance No. I of 1968), is a self-generating federal regulatory body tasked with promoting the cultivation, manufacture, and export of tobacco and tobacco products.
The ordinance, promulgated on February 8, 1968, was approved by the National Assembly on May 14, 1968, and assented to by the President on May 17, 1968. The PTB Ordinance, along with MLO-487 and the Federal Tobacco Marketing Control Rules of 2016, regulates the tobacco industry.
The officials argue that tobacco, as a special crop, has always been treated as a federal subject due to its importance in trade, commerce, finance, and its significant role in domestic industry. As such, its functions cannot be transferred to the provinces without the enactment of legislation. They warned that transferring functions to provincial authorities could create conflicts regarding tobacco cultivation, production, manufacturing, exports, taxes, and pricing.
The officials also pointed out that in countries like China, India, and Zimbabwe—well-known for producing high-quality tobacco—the crop is managed as a federal subject.
The PTB officials further noted that tobacco and tobacco product exports have significantly increased - from $ 42 million in 2019-2020 to $ 108 million by December 2024.
During the current financial year (2024-2025), the Federal Board of Revenue (FBR) has collected more than Rs. 237 billion in federal excise duty and sales tax from the tobacco sector. As the withholding agent of the FBR, PTB is expected to remit up to Rs. 600 million in taxes during FY 2024-2025 under sections 149, 236A, and 236P.
The PTB officials also referenced a 2012 clarification from the Law and Justice Division, which confirmed that, following the 18th Amendment, the Pakistan Tobacco Board Ordinance, 1968 was enacted to regulate, control, and promote the export of tobacco products, set grading standards, conduct research, and provide training in tobacco testing.
The Division noted that these objectives fall under Entry 27 of Part-I of the Federal Legislative List in the Fourth Schedule of the Constitution, which designates the ordinance as a federal law.
The letter emphasizes that tobacco marketing, control, and regulation is a complex process currently managed at the federal level. With devolution, the PTB warns that different regulatory regimes at the provincial level could disrupt the collection of Federal Excise Duty (FED) and sales tax on cigarettes and tobacco products.
In light of these concerns, PTB officials have urged the High Powered Rightsizing Committee, formed by the federal government, to review its decision in the broader interest of the country.
Copyright Business Recorder, 2025
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