Pakistan: Illicit Tobacco Trade Costs Govt Financial Losses

A flourishing book launch on Thursday took place here at Islamabad Club for the book describing, how the tobacco industry can play a pivot role in economic development of the country. The triumphant event was organized by Pakistan Tobacco Company (PTC), while Baligh ur Rehman Minister of State for interior as chief guest, (Name of PTC official) representing Pakistan Tobacco Company (PTC), (Name and designation of official) AC Neilson and other concerned guests attended the ceremony. Addressing the participants, Baligh ur Rehman Minister of State for interior said that government is fully committed to provide business and investment friendly environment in the country and decided to take all necessary measures to call investment and business enterprises on board as active partners in the economic development of country.

Illegal tobacco event showing smuggled and fake tobacco Picture: Richard Austin

He said that tobacco sector has been playing a vital role of economic stability in country by contributing the revenue of 300 billion rupees for last five years under head of taxes and duties. “Currently government is facing financial losses due to illicit trade in tobacco sector, which needs to be addressed”, he maintained. He assured that government would utilize all resources to curb the menace of smuggling facing by this particular industry, which would also be helpful in generating revue for the government too.

According to research report, tobacco industry played a vital economic role by providing livelihood to more than a million people by creating employment opportunities for more than 350,000 people. Tobacco sector is suffering immensely from lack of a level playing field. Almost 1 out of every 5 cigarette sold in Pakistan has either been manufactured in Pakistan without paying taxes or smuggled into Pakistan resulting annual loss of 20 billion rupees to the national exchequer, while 99% revenue under head of taxes is being contributed by 2 largest cigarette manufacturing companies in Pakistan.

In agriculture sector, 75000 farmers attached their survival with cultivation of tobacco crop in different parts of country showing the annual revenue of Rs15 billion, while the tobacco crop of worth Rs.100 million is being annually produced in the country covering the total land area of 45000 hectares as 77% of total tobacco crop in KPK, 21% Punjab and 2% in Balochistan. The business volume of cigarette market reached upto the fiscal amount Rs329 billion, out of which PTC carried 42.9 billion cigarette sticks, Philip Morris 20.9 sticks and others including non custom and duty paid touched 15.2 billion sticks and smuggled 2.7 billion sticks. The total tobacco crop of 54% utilized by tax-payer manufacturers, while 37% of tobacco products have not been covered by regulatory or fiscal regime in the country.

There are certain regulatory bindings on tobacco advertisement, sponsorship, consumer incentives and promotion by billboards as per the law defined by the government, however entire tobacco industry did not complied with government’s rules and regulations. According to AC Nielson, Cigarette (Printing of Warning Ordinance 2002 required to print pictorial health warning on 40 % of front and back of cigarettes packs. But non-compliant cigarette packs without mandatory health warning are being openly sold in retail outlets across the country. Enditem