Fall in collection: Meeting to discuss tobacco sector rescheduled for August 9

Federal Board of Revenue (FBR) Chairperson Rukhsana Yasmin is expected to attend the meeting of special committee on decline in tax collection from tobacco sector which has been rescheduled for August 9, 2018 at the Parliament House to ascertain facts about the revenue contributions by the cigarette manufacturers.
Sources said that the meeting of special committee was scheduled to be held on August 2. However, now the meeting has been rescheduled for August 9. It is expected that the Special Committee would be participated by tax authorities along with her team of relevant Members.
Sources said that the FBR will inform the Special Committee about the positive impact of third tier of FED on cigarettes on revenue collection.
The documented tobacco industry has estimated that tax contribution of leading cigarette manufacturers to the FBR would reach Rs 110 billion in the next two years if third tier (third slab of federal excise duty) and enforcement against illicit cigarettes continue with full force. The contribution into taxes can go up to Rs 110 billion and enter into club of paying over $1 billion mark in next 1-2 years against Rs 90-92 billion projected collection for 2017-18. The market share of illicit cigarettes stands at 35 percent and by reducing 10 percent, the tax collection can easily go up by Rs 10 billion. Documented industry has repeatedly proposed to the government to continue with existing three-tier taxation system and persistent efforts against illicit cigarettes in big way.
Tax authorities were optimist that the third tier of FED on cigarettes has resulted in sudden increase in FED collection in 2017-18 which may cross Rs 90 billion by start of 2018-19. It is a good fiscal policy which should be sustained and continued in the next three years.
The new notice issued by the Senate Secretariat revealed that the meeting of Special Committee on decline in tax collection from tobacco sector would be held on August 2 at the Parliament House. The notice said that Kulsoom Perveen would be head of the Committee. Members of the committee included Senators i.e. Dilawar Khan, Mushahid Hussain Syed, Ch Tanveer Khan, Sherry Rehman, Dr Ashok, Anwar ul haq, Azam swati, Muhammad Ali Saif, Molana Gafoor Haideri, Senator Shafiq Tareen and Hidayat Ullah.
According to experts, there is a clear conflict of interest in the constitution of Special Committee on decline in tax collection from tobacco sector. The committee has been specifically assigned the task to investigate the reasons behind decline in tax collection from tobacco sector, if any. At the same time, it is not clear that how an owner of a cigarette manufacturing company could be the member of such committee.