Tobacco growers stand divided on implementation of advance tax

• ‘Farmers that are influenced by illegal manufacturers are only making the advance tax issue a political game’

ISLAMABAD: While a group of tobacco growers from Khyber Pakhtunkhwa (KP) kept protesting against advance tax introduced in the budget 2019-20, another group, which reportedly represents the majority of growers in the province, claimed that the tax will actually discourage the illegal trade of tobacco.

Explaining how some “influenced farmers” were incorrectly claiming that the advance tax on green tobacco was putting a burden on them, the major growers’ group said that the rights of all farmers were protected by laws made by the government and that local illegal manufacturers were actually behind the plight of the farmers’ community.

“They are just making it a political game,” said group representative Hahi Mushfiq Khan while addressing a press conference on Wednesday. “These farmers’ organisations influenced by local illegal manufacturers are politically connected and motivated.”

He said the so-called farmer associations were being used in order to pressurise the government take back corrective measures introduced to curtail illegal trade and to make tobacco crop sustainable for a longer period of time.

Referring to the farmers who had protested to demand elimination of advance tax of Rs300 per kilogramme, Khan said that some of the farmers were incorrectly claiming that they would be exploited, as due to the ‘adjustable’ excise duty, the demand for tobacco would go down and the farmers would be left with unsold crop.

He added, “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, he said, the farmers were incorrectly claiming that due to the ‘adjustable’ excise duty, they would 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 kilogramme of tobacco which is offered to the tobacco farmers. Any purchase below the minimum price is illegal and prohibited under the PTB laws,” he added.

Khan said farmers were being misguided and exploited at this stage by the local illegal cigarette manufacturers since this levy would not only force them to pay on adjustable tax on the processed leaf but would also provide the Federal Board of Revenue with leaf purchase data of all manufacturers.

“This tax is advance and adjustable and does not hurt the farmers at all, whereas local illegal cigarette manufacturers continue to misguide the farmers of Khyber Pakhtunkhwa for their own benefits,” he maintained.

It is pertinent to mention that during the press conference of majority growers, another group, reportedly from Mardan district, kept protesting against the advanced tax, saying that those addressing press conferences were not representing the actual farmers.