Possibility of illicit trade of cigarettes has almost died down
\n LAHORE
\nThe Pakistan government is expected to collect an additional revenue of at least Rs60 billion after increasing the federal excise duty (FED) on tobacco products, social activists said while rejecting multinational tobacco industry\u2019s claim of illicit cigarettes in the market.
\nThe multinational tobacco companies continue to falsely claim since 2014 that share of illicit cigarettes is 40% of the market. This number is used consistently to cause panic in the government. According to independent studies, the actual share of illicit cigarettes in the market is around 18 per cent. A major part of this illicit activity actually belongs to multinational brands. Now that the track and trace system has been put in place, the possibility of illicit trade of cigarettes has almost died down, said Malik Imran, country head of Campaign for Tobacco-Free Kids.
\nHe said they had conducted a survey to explore the volume of illicit cigarettes in the market. He said though the findings of the survey would be made public next week, \u201ctentatively we can say the volume is now negligible\u201d. He said multinational cigarette makers were deliberately spreading the propaganda in the market that the volume of illicit trade was increasing after the rise in taxes on cigarettes, which is a blatant attempt at pressuring the government.
\nThere has been an increase in revenues of international cigarette brands this year according to their own reports. \u201cTrack and trace system has been implemented fully and no industry is now able to do illegal business,\u201d he categorically stated.
\nHe said it is estimated that cigarette consumption had plummeted after the recent taxes on tobacco. He said due to the decline in consumption, the health cost of cigarettes was expected to come down to one billion dollars from over three billion dollars annually.
\nMalik further pointed out that after increasing the taxes on cigarettes, the volume of expenditure on tobacco-related deceases annually would also be reduced from Rs620 billion to Rs200 billion.
\nThe multinational tobacco companies have been lobbying that the magnitude of the illicit cigarette trade has prevented the government from increasing tobacco taxes, but the facts are quite the opposite to it.
\nA research study estimates of the illicit trade market, as a percentage of the total cigarette market in Pakistan, range from 9 per cent to 18 per cent. In contrast, the Pakistan Tobacco Company (subsidiary of British American Tobacco) claims that illicit trade was 40 percent of the total sales volume.
\nAnalysis of financial panel data from the three cigarette manufacturers listed on the Karachi Stock Exchange reveals that approximately 4 billion cigarette sticks were underreported in 2020-21. The year-by-year estimates show that cigarettes were under-reported by 7.8 percent, 7.9 percent, and 8.6 percent in 2018-19, 2019-20, and 2020-21, respectively. Collectively, the government is estimated to have lost more than PKR 23.5 billion in revenue over the last three years.
\nThe study says that rigorous evidence from across the world demonstrates that increasing the price of tobacco products through higher taxation is the most effective way to reduce tobacco consumption.
\nThe cigarette industry in Pakistan argues that higher taxes drive illicit trade, claiming smokers seek out smuggled or non-duty-paid cigarettes because they cost less, though this is against the fact as per the research studies carried out in different areas of the country.
\nThe study reveals that undeclared production is the key cause of illicit trade in Pakistan and better tax administration, particularly to prevent tobacco industry under-reporting, will maximize the revenue potential of the federal excise duty.
\nSanaullah Ghumman, secretary general of Panah, said the increase in the FED on cigarettes was in line with the recommendations of the World Health Organisation (WHO), therefore the public should support the government\u2019s move to discourage tobacco consumption.
\nHe said the government should stand by its decision of increase in the FED as this would help collect additional revenue of Rs60 billion from taxes on the cigarettes.
\nThe average Pakistani would spend around 10 per cent of their total monthly income on cigarettes, he said, adding that higher taxes on tobacco products were the only solution to protect the youth from the menace.
\nHe pointed out that multinational tobacco companies would show their production less to the government to evade taxes, and then sell their underreported stock in the open market, causing a loss of billions of rupees to the national exchequer. \u2014 DNA<\/p>\n","protected":false},"excerpt":{"rendered":"
Possibility of illicit trade of cigarettes has almost died down LAHORE The Pakistan government is expected to collect an additional revenue of at least Rs60 billion after increasing the federal excise duty (FED) on tobacco products, social activists said while rejecting multinational tobacco industry\u2019s claim of illicit cigarettes in the market. The multinational tobacco companies […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-328936","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"\n