FBR Tells Senate Panel Tobacco Tax Theft Is Rs. 40 Billion, Not $1 Billion

The Federal Board of Revenue told a Senate sub-committee on Thursday that estimated tax evasion in the tobacco sector stands at around Rs. 40 billion annually, far below the government’s publicly stated claim of $1 billion, or roughly Rs. 280 billion.

The disclosure came during a meeting of the Senate Standing Committee on Interior and Narcotics sub-committee, chaired by Senator Saifullah Abro, which reviewed issues related to smuggling, narcotics, misuse of tax-exempt imports, and FBR enforcement.

During the meeting, Senator Abro questioned FBR officials about government advertisements claiming that annual tax theft in the tobacco sector had reached $1 billion. In response, FBR officials said the actual estimated evasion was around Rs. 40 billion. They also told the panel they were unaware of the nationwide anti-tax theft campaign being run by the federal government.

Expressing concern, Senator Abro said public awareness campaigns should be based on accurate and verifiable information. 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 during the meeting.

The committee was also informed that the FBR had seized 16 tobacco factories on charges of tax fraud. Members were further briefed on the regulatory framework governing the tobacco industry.

The panel also examined allegations that raw materials imported for tax-exempt areas were being diverted and used elsewhere, resulting in substantial revenue losses.

Senator Abro directed all departments concerned to submit 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 full support to investigators and ordered strict action against all those involved, including senior FBR officials, if found responsible.

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, saying institutional leadership must ensure proper functioning when matters involving 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 reiterated support for enforcement agencies and said all those found guilty must be brought to justice without discrimination.