FBR tells Senate panel tobacco tax evasion is Rs40bn, not $1bn

ISLAMABAD: The Federal Board of Revenue (FBR) told a Senate sub-committee on Thursday that estimated annual tax evasion in the tobacco sector stands at around Rs40 billion, a figure sharply lower than the government’s public claim of $1 billion, or about Rs280bn.

The disclosure came during a meeting of the Senate Standing Committee on Interior and Narcotics sub-committee, chaired by Senator Saifullah Abro, which was held to review smuggling, narcotics trafficking, the misuse of tax-exempt imports and FBR enforcement. During the session, Senator Abro questioned FBR officials about government advertisements stating that annual tobacco tax evasion amounts to $1bn.

According to the briefing, FBR officials said the actual estimated loss was about Rs40bn. They also informed the panel that they were unaware of the federal government’s nationwide anti-tax theft campaign. Senator Abro expressed concern over the gap between the official estimate presented to the committee and the figure used in the public campaign, saying awareness efforts should rely on accurate and verifiable data.

He directed the FBR and other relevant authorities to bring the discrepancy to the notice of the prime minister and have the advertisements corrected. “This is alarming, how FBR briefed the prime minister and the Ministry of Information regarding tax theft,” Senator Abro said.

Committee reviews enforcement and cigarette theft case

The committee was also informed that the FBR has seized 16 tobacco factories on allegations of tax fraud. Members were briefed on the regulatory structure governing the tobacco industry as part of the wider review.

The panel further examined allegations that raw materials imported for tax-exempt areas were being diverted for use in other locations, leading to significant revenue losses. Senator Abro instructed all departments concerned to present detailed proposals and complete information at the next meeting.

The Federal Investigation Agency also briefed the committee on progress in a case involving the theft of 2,828 cartons of cigarettes. Senator Abro assured investigators of full support and ordered strict action against all those found involved, including senior FBR officials if responsibility was established.

Senator Aamir Waliuddin Chishti and Senator Hidayatullah Khan attended the meeting as special invitees. Senator Abro also criticised the absence of senior officials from key departments and said institutional leadership must ensure effective functioning when issues concerning national revenue are under discussion.

At the end of the meeting, the committee directed all departments to submit comprehensive records relating to smuggling and tax evasion cases. Members also reiterated support for enforcement agencies and said all those found guilty should be brought to justice without discrimination.