Tobacco industry accused of earning millions but paying ‘peanuts’ in terms of taxes

ISLAMABAD: The multi-national tobacco industry in Pakistan has been earning millions of rupees annually through the sale of cigarettes and other related products but is paying peanuts to the government in the form of taxes.

This has been claimed in a research study, “Illicit Trade in Tobacco: A Dossier on Contributing Factors and its Global Implications,” conducted by the Centre for Global and Strategic Studies (CGSS).

The study released, here on Saturday, revealed that multinational companies’ role in the illicit trade of cigarettes went unnoticed as they were using different tactics to influence the government and policy makers.

It said the industry would engage prominent names from different sectors especially from think-tanks to justify lower taxes and promotion of their image among the public.

The study said the companies were avoiding millions of rupees in taxes under a pretext of exaggerated illicit trade of the product in Pakistan, adding that wrong figures provide camouflage for advocacy groups to promote the concept of tobacco industry-friendly policies.

The study stated that fudging of the data is a common practice the world over and Pakistan is no exception.

There is consensus among experts that illicit trade should not hinder taxation and fulfil the state’s obligation under the global system.

The study debunked the impression of 40 percent to 50 percent illicit trade volume in Pakistan’s tobacco industry, saying that the volume of the illicit trade was not more than nine percent according to a survey.

In Pakistan, 22 million people (30 percent male and five percent female) consume tobacco-related products daily, leading to annual deaths of over 120,000 persons.

The illicit tobacco trade has introduced many problems, but two aspects of them worth the attention: it hampers the efforts of governments to control the spread of consumption of tobacco and the most dangerous impact is that tobacco industry use it to advocate lower taxes.

The study said that there is no second opinion that illicit trade has negative impacts on society’s social and financial dynamics in different ways, threatening the national security as well through tax evasion.

Copyright Business Recorder, 2021