ISLAMABAD - A group of small tobacco growers from Khyber-Pakhtunkhwa has alleged that the government taxation policy is hijacked by two big multinational companies and the decision to impose Rs 300 levy on green tobacco will kill around Rs 50500 tobacco growers.

The tobacco growers of Khyber-Pakhtunkhwa are divided over the proposed advance tax of Rs300 per kilogram on green tobacco; one group of growers felt it will burden farmers and should be imposed on manufacturers, while the other group says the advance tax is not on growers. Exchange of harsh words between pro and anti tobacco tax occurred here at National press Club when an anti-tax growers group protested during the press conference of the pro-levy growers.

Both the groups accuse each other of protecting the interest of big and small tobacco companies. The press conference was organized by the pro-tax growers which was interrupted by the anti-tax growers and industrial workers.

The group of small tobacco growers, led by their central leaders Muhamamd Ali Khan Dagiwal and Liaquat Yousafzai, alleged that the influential farmers are talking on the behalf of two big multinational tobacco companies, i.e. Pakistan Tobacco Company and Philip Morris. They alleged that there are 65000 tobacco growers in various districts of Khyber Pakhtunkhwa but the two big multinational companies issued only 14500 purchase agreements to them for the purchase of the product.

KP growers divided over proposed advance tax

It meant that the rest of the farmers are at the mercy of small tobacco companies and there is no guarantee that they will buy their ready tobacco, he said.

The influential farmers are getting benefits from the multinational tobacco companies and they are getting preferential treatment by both the MNCs. The small tobacco companies will leave the market if the government executed its decision of imposing Rs 300 per KG levy on tobacco, they said.

On the other hand, a group of influential tobacco growers led by Mushfiq Ali Khan, explained how some influenced farmers are incorrectly claiming that the advance tax on green tobacco is putting burden on them said that their rights are protected by laws made by the government and that local illegal manufacturers are causing the damage to the livelihoods of the actual farmers and making it a political game.

The group of tobacco farmers, while addressing the press conference, claimed that these farmers’ representative organizations influenced by local illegal manufacturers are politically connected and motivated. The farmer associations are being used to pressurise government for taking back corrective steps which are introduced to curtail illegal trade to help tobacco crop sustainability over a long period of time, Mushfiq Ali Khan said.

Referring to the farmers, who held protest for eliminating the advance tax of Rs300, they said that some of the farmers incorrectly claim that they will be exploited since due to the ‘adjustable’ excise duty, the demand for tobacco will go down and the farmers will be left with unsold crop. They added “that this is factually incorrect since Section 20A of the Pakistan Tobacco Board (PTB) Ordinance 1968 gives full protection to the farmers and makes it compulsory for tobacco companies to purchase any surplus of excess unsold tobacco by the tobacco manufacturers”.

To further explain the impact of advance tax, they said that farmers incorrectly claim that they will be exploited since due to the ‘adjustable’ excise duty, they will be offered a lower price for their crop.

“This again is a misstatement since the Minimum Indicative Price (MIP) of tobacco is fixed each year by the Ministry of Commerce with full representation of the farmers and this is the minimum price per kilogram of tobacco which is offered to the tobacco farmers. Any purchase below the minimum price is illegal and prohibited under the PTB laws,” he said.

 

They also clarified another misstatement about the exports. They said that only a small portion of tobacco is actually exported from Pakistan and that is already exempted from this law under federal excise duty, and it is again a misstatement by the illegal cigarette manufacturers.

Mushfiq said farmers are being misguided and exploited at this stage by the local illegal cigarette manufactures since this levy not only forces them to pay on the adjustable tax on processed leaf but also provides FBR with leaf purchase data for all manufacturers.

This tax is advance and adjustable and applied on manufacturers and does not hurt the farmers at all whereas local illegal cigarette manufacturers continue to misguide the farmers of KP for their own benefits, he said.