FBR restores advance duty on tobacco

ISLAMABAD: The Federal Board of Revenue (FBR) has restored the advance Federal Excise Duty (FED) for Green Leaves Thrashing Units (GLTs) at Rs10.

FBR Chairman Syed Shabbar Zaidi on Monday informed the National Assembly’s Special Committee on Agriculture Products that the board proposed to increase the duty to Rs300 from next fiscal year, but on the very committee’s recommendation the move had been shelved.

The government had imposed the FED in a bid to track, trace and document the tobacco sector; however, the move failed to achieve the desired results.

However, the committee previously argued that the increase in FED has effectively crippled the mandiwalas and farmers as they had to shut down their businesses and large quantity of tobacco remained unsold.

The net impact of the levy was relatively nil on the cigarette manufacturers since the FED was adjustable but had affected growers.

It is pertinent to mention that in the amended Finance Act 2018, the government had increased the FED from Rs10 to Rs300 per kg.

Levying FED at GLT stage had precluded the tobacco dealers, middlemen and manidwalas to effectively engage in tobacco trade and had shrunk farmers’ bargaining power.

The meeting also discussed the matter related to the minimum support price for cotton, allocations for agricultural research, promotion of olive cultivation, duties on fertilisers and poultry.

In line with the recommendations of the special committee, State Minister for Revenue Hammad Azhar agreed to allocate Rs1 billion for agriculture research in the budget for the next fiscal year.

The members stressed that NA’s resolution and special committee’s recommendations regarding the imposition of regulatory import duty and minimum support price for cotton should be enforced in letter and spirit to enable the farmers to receive international parity price.

Syed Fakhar Imam argued that given the lack of meaningful incentives, particularly the indicative price, not only has Pakistan’s cotton production and land under cultivation shrunk but continues to cede space to regional competitors.

Imam said that cotton was Pakistan’s strategic crop with immense potential for competitive advantage however local growers never fetched a fair price for their toil.

He said that lack of regulatory duty on cotton imports is tantamount to benefitting Indian and central Asian farmers and exploiting the local growers.

Adviser to PM on Commerce Abdul Razzak Dawood said the decision to fix minimum support price for cotton and the restoration of regulatory import duty would have negative repercussions for the entire value chain of the textile industry.

He further stated that the main reasons for failure to fetch international parity price was the quality of seeds, excessive use of pesticides, contamination and artificially maintained high sugarcane prices.

Hammad Azhar also said the support price mechanism caused distortions in the market and affect the entire value chain of the textile industry and may jeopardise the foreign exchange earnings.

Pakistan Kissan Ittehad President Khalid Khokhar urged the committee that fuel price adjustment levied on tube wells and tariff for electricity on agriculture tube wells should be abolished.