Documenting the Tobacco Sector
Loss of tax evasion from the illegal trade of cigarettes in the year 2019-20 reached ~ PKR 77.3 billion.
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The federal government announced a new tax of PKR 36 billion on cigarettes and tobacco last month, the tax has been imposed to fulfill the gap created by the reduction in retail tax.
Experts believe that taxing the tobacco crop processing i.e. at the green leaf threshing (GLT) stage instead of 'manufacturing' or 'retail level' can be a more efficient way of countering the illicit tobacco trade altogether. Moreover, the government’s objectives of documenting the economy and getting out of The Financial Action Task Force’s (FATF) watch list are tied to clamping down on illicit sectors.
According to a report by Oxford Economics, the estimated loss of tax evasion from the illegal trade of cigarettes in the year 2019-20 reached PKR 77.3 billion which was PKR 50.9 billion in the year 2018-19 (this was already three times higher than the federal government’s spending on public health that year).
GRAPHIC OF THE DAY
Annual volume of tax evasion due to these top five sectors in Pakistan 🇵🇰 is around PKR 310 billion
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