Increasing taxes on imported cigarettes is the recommendation of the PAC on Wednesday.
A report from the Federal Board of Revenue indicated that cigarette companies evaded between PKR 50-60 billion in tax annually. Only two companies paid PKR 157 billion in taxes annually on cigarettes, while 160 billion in taxes were collected on cigarettes.
The PAC under Chairman
Federal Board Revenue (FBR) audit paras for the financial year of 2019-20 were examined by the PAC under Chairman Noor Alam Khan.
Two multinational companies were paying tax of PKR157 billion, or 98% tax, while another 20 companies received no more than 3 billion rupees.
As 17% GST is applicable on both local and imported cigarettes, as well as federal excise duty, the cigarette industry could collect up to PKR 60 billion in taxes.
PKR 41 was being charged to multinational companies by the FBR as well as to local cigarette makers as tax. As far as imports of cigarettes are concerned, the FBR chairman said 75 percent tax would be levied.
Multinational companies
A PAC member, Noor Alam Khan, called for a tax on cigarettes as much as possible due to multinational companies only using Pakistani tobacco.
The Public Accounts Committee expressed displeasure at the lack of internal auditors and directed all ministries to conduct internal audits.
As a result, it directed all government departments, except for the Auditor General, to undergo internal audits.
In lieu of the joint secretary, Noor Alam Khan instructed that audit paras be signed by the secretaries of respective departments.
In the audit para, the audit official stated that the national exchequer is losing over PKR 2.56 billion due to the non-realization of Value Addition Tax. Ten field offices of the FBR failed to recover the VAT in 6,874 cases at the time of clearance of imported goods or release of confiscated goods.
FBR performance
In the court, cases worth over 2 billion rupees are pending, said the chairman of the FBR. Officers involved in the case must be identified and responsible.
Noor Alam Khan, chairman of PAC, recommended bringing forward the names of responsible officers. Consequently, all FBR performance is questionable.
The Auditor General is required to receive all records, including internal audit, from ministries and departments. Moreover, the FBR chairman does not attend departmental accounts committee meetings and it failed to provide complete records to AG.
There were clear instructions from PAC for all records to be audited, said PAC chairman Noor Alam Khan.
Efforts will now be made to ensure that all departmental accounts committees are presided over by the concerned secretary. He instructed all ministries to send these instructions. “The DAC does not allow officers below the rank of grade 21 to be members,” he stated.
16 ministries have a Chief Financial Officer, while 24 do not have one. Out of 40 ministries, 16 have a Chief Financial Officer. It is also worth mentioning that no auditors have been appointed in any ministry of the country.
According to the chairman of the FBR, there is a complete auditing and accounting department at the FBR. According to the Auditor General, appointments in ministries will be made when the Ministry of Finance announces the seats. CFOs have been appointed in some ministries, according to officials from the Ministry of Finance. Each ministry should be assigned a Chief Financial Officer (CFO) and an auditor by the Finance Ministry.
