KP Assembly members seek tax on tobacco moved to other provinces

PESHAWAR: Members of the Khyber Pakhtunkhwa Assembly on Monday urged the provincial government to levy a tax on the transportation of locally grown tobacco to other parts of the country where cigarettes are manufactured in tax-free zones.

The matter came up during a session chaired by Speaker Babar Saleem Swati, where lawmakers said Khyber Pakhtunkhwa produces the bulk of the country’s tobacco but has only one or two cigarette manufacturing units.

Treasury member Abdul Karim Khan raised the issue through a calling attention notice. He said Khyber Pakhtunkhwa produces 98 per cent of the country’s total flue-cured Virginia tobacco, but neither the province nor its farmers receive the benefits they should because companies buying the crop have established cigarette factories in other areas, including Punjab and Azad Jammu and Kashmir.

He expressed regret that KP has only one or two cigarette manufacturing factories and said plants set up in tax-free zones elsewhere do not benefit the people of the province.

Abdul Karim Khan said the province’s difficult economic conditions were pushing young people towards terrorism and drugs. He said there was a need to tax tobacco transported from KP to other provinces for cigarette production.

Referring to growers’ concerns, he said the law does not allow tobacco prices to fall below the rate fixed the previous year, but this year the crop was sold at prices lower than last year’s level, causing heavy losses to farmers.

Opposition Pakistan Peoples Party lawmaker Ahmad Karim Kundi said farmers were deeply concerned about their problems and were looking to the government for meaningful action. He said the matter should be taken up at every available forum and also debated in the assembly, adding that it was a highly sensitive issue because the province was producing tobacco while its growers were receiving little benefit.

Responding to lawmakers, Excise and Taxation Minister Syed Fakhr-i-Jahan said the issue had been raised appropriately because most of the country’s Virginia tobacco is produced in KP, yet only one or two cigarette factories are operating in the province. He said that under the current arrangement, KP receives only development cess on tobacco, while the relevant federal excise duty goes to the places where the factories are located.

Speaker Swati said it had been pointed out that 99 per cent of the country’s tobacco was produced in KP, while cigarette factories functioning in other parts of the country did not benefit local residents. He directed that a special committee of the house be formed to examine what he described as a multi-dimensional issue, and said the committee would be notified by the next day.

Regi Town project also raised

In another calling attention notice, lawmakers criticised the provincial government over the non-completion of the Regi Town project even after 35 years.

The issue was raised by opposition PML-N member Sobia Shahid, who said the project had been launched in 1991. She said allottees had made full payments in 1994, but the government had still not granted them the right to build houses in several sectors of the township.

The session was later adjourned until Tuesday afternoon after the speaker pointed to a lack of quorum.