News Column

PTC contributes more than PKR 41 billion in Government levies

August 19, 2014

Islamabad Pakistan Tobacco Company has announced its Half yearly results for 2014.

According to the financial results released, the company contributed more than Rs. 41 billion to Government revenues on account of excise duty, sales tax and income tax, which is a 31% increase over the same period last year. The growth in tax contribution is even more that the company’s gross turnover growth of around 24%. The company also declared a profit of Rs. 2.85 billion with an earnings per share of Rs. 11.84

Tobacco industry is a big revenue spinner and contributed more than Rs. 87 billion in FY 2013-2014. According to tax experts, due to the increase in excise duties this year the revenue contribution from the sector is expected to be in the vicinity of Rs. 102 billion this fiscal year.

It is noteworthy that more than 99% of the government revenue contribution in the tobacco sector comes from two companies i.e. Pakistan Tobacco Company and Philip Morris Pakistan. While the legitimate players are paying up their share of the levies, incidence of illegal trade in cigarettes stands at an alarming 25%+ and has resulted in a loss of over PKR 80+ Billion to the Government exchequer over the past five years.

The cheap illegal brands on which no duty is paid are widely available across the country and are sometimes sold at a price much below the minimum tax payable per cigarette pack. Due to the low purchasing power, the consumers get attracted to these products. Not only that but the margins for the wholesalers and the distributors are also much higher for illegal cigarettes in comparison to the legal sector. Resultantly the legitimate cigarette sector suffers.

According to sources in government, enforcement against these illicit brands is being stepped up as national exchequer may lose more than 100 billion rupees in revenues in the next five years if nothing is done.

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Source: Daily Messenger (Pakistan)

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