Govt to slash taxes for salaried class if FBR recovers Rs350 billion from cigarette evasion

ISLAMABAD: Minister of State for Finance and Revenue, Ali Pervaiz Malik, announced on Thursday that the government is considering reducing taxes on the salaried class and scrapping the tax on milk.

But there’s a catch—it will only happen if Federal Board of Revenue (FBR) can recover Rs300 to Rs350 billion lost to tax evasion from smuggled and non-duty-paid cigarettes.

At a roundtable discussion on the FBR’s Track and Trace System (TTS), Malik explained that prime minister has directed the FBR to cut income taxes for salaried workers.

However, this tax relief hinges on cracking down on tax evasion in the tobacco industry which has long been a major issue. He said that the government’s efforts to digitise tax collection systems will be crucial in making this happen.

The event organised by the Institute of Public Opinion and Research (IPOR) in collaboration with PILDAT brought together government officials, industry leaders and experts to discuss challenges ahead. Malik stressed the need for everyone to work together, highlighting that building a stable economy is a team effort.

IPOR’s recent study which looked at 720 retail outlets across Punjab and Sindh, revealed some troubling findings. Out of 264 cigarette brands surveyed only 19 complied with the TTS regulations which include having proper tax stamps.

Shockingly, 58 per cent of the market is made up of either smuggled cigarettes or brands that haven’t paid the required duties. Many of these brands are also selling below the minimum legal price, making it harder for the government to collect taxes.

Muhammad Zaheer Qureshi from the FBR acknowledged challenges they face in enforcing TTS from technological hurdles to industry pushback. He said stronger measures are needed to ensure compliance including tougher penalties and better public awareness campaigns.

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