LAHORE: The illicit cigarettes in Pakistan is not only inflicting huge loss to the national kitty but also posing serious health hazards to the consumers of such cigarettes.


Illicit cigarette in Pakistan is available at price range of Rs 20-35, which is less than the government mandated minimum price of Rs 62.76, sources said adding: “In the tobacco sector, the market share of illicit cigarette sales has reached 40% costing the government more than Rs 80 billion annually in taxes alone.”


The two tobacco companies in Pakistan, with a market share of around 60% contribute 98% of the tobacco tax collection. The other 50 tobacco companies contribute only 2% to the national exchequer, the sources opined.


Experts believe the consumers of legal cigarettes will ultimately unable to absorb multiple taxes and price increases and will shift their consumption to cheap illicit cigarettes; any increase in taxes to legal cigarettes manufacturers will result in an increase in illicit activity.


The sources maintained that Pakistan has only 10 green leaf thrashing (GLT) plants for tobacco produced and if all taxes are applied at the GLT stage, the entire tobacco industry will come under the tax net.


Experts believe that strict enforcement of laws is necessary to curb the illicit tobacco trade in Pakistan. In this regard, effective enforcement of track and trace system is vital to counter tax evasion, they added.


Track and trace system involves implementation of a robust nationwide electronic monitoring system of production volumes by affixing tax stamps on various products to shadow their flow throughout the supply chain.


Source: Business Recorder – January 30, 2022