The Federal Board of Revenue told a Senate sub-committee on Thursday that estimated tax evasion in the tobacco sector is around Rs. 40 billion annually, significantly lower than the government’s publicly stated claim of $1 billion, or about Rs. 280 billion.
The matter came up during a meeting of the Senate Standing Committee on Interior and Narcotics sub-committee, convened by Senator Saifullah Abro to review smuggling, narcotics, misuse of tax-exempt imports, and FBR enforcement.
During the proceedings, Senator Abro questioned FBR officials over government advertisements claiming annual tobacco tax theft had reached $1 billion. In response, FBR officials told the committee that the actual estimated evasion was around Rs. 40 billion. They also said they were unaware of the nationwide anti-tax theft campaign being run by the federal government.
Senator Abro expressed concern over the discrepancy and said public awareness campaigns must be based on accurate and verifiable information. He directed the FBR and other relevant authorities to bring the matter to the notice of the prime minister and ensure the advertisements are corrected.
“This is alarming, how FBR briefed the prime minister and the Ministry of Information regarding tax theft,” Senator Abro said.
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 sector.
The panel also examined allegations that raw materials imported for tax-exempt areas were being diverted and consumed elsewhere, leading to major revenue losses.
Senator Abro directed all relevant departments 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 leadership must ensure institutions function effectively when matters of national revenue are under discussion.
At the conclusion of the meeting, the committee directed all departments to submit comprehensive records of smuggling and tax evasion cases. Members reaffirmed support for enforcement agencies and said all guilty parties must be brought to justice without discrimination.
