Manufacturing unit: T&T system installation decreases overall sales of illicit cigarettes

ISLAMABAD: The installation of the track and trace system at the manufacturing units has decreased the overall sales of illicit cigarettes due to constant monitoring and checking of finished products in the market.

This has been stated in a new report of Capital Calling, a network of academic researchers and professionals.

The report revealed that the government has taken a step in the right direction by increasing the Federal Excise Duty (FED) on cigarettes, as it will not only generate additional revenue, but also bring down smoking in the society.

It appreciated the government for the FED increase, urging it to hold ground against the pressure by the multinational companies.

The sale of illicit cigarettes has plummeted after imposition of track and trace system so the propaganda that higher taxes will give rise to smuggling are just allegations, stated Dr Hassan Shehzad, from IIUI.

Preliminary findings of a recent survey have shown that volume of illicit trade of cigarettes is negligible, he said.

He quoted a report, stating, “Multinational cigarette makers are deliberately spreading the propaganda in the market that volume of illicit trade is increasing after the rise in taxes on cigarettes, which is a misplaced argument.”

The report further mentioned that “there has been an increase in revenues of international cigarette brands this year according to their own reports,” he stated.

“Track and trace system has been implemented fully and no industry is now able to do illegal business,” he stated, referring to the report.

It is estimated that cigarette consumption has plummeted after the recent taxes on tobacco. He said due to the decline in consumption, health cost of cigarettes is expected to come down to one billion dollars from over three billion dollars annually. At the same time, the revenue that the government will generate will be touching the figure of Rs250 billion. Both these indicators are positive for Pakistan.

The report alleged that the said companies underreport their production and then sell their non-reported products in the illicit market, causing a loss in billions of rupees to the national exchequer. Furthermore, illicit trade is not an excuse because the industry is making deadly non-essential products.

It further stated that the government needs to counter illicit trade as well as increase the taxes on tobacco products.

In another report, Khalil Ahmed from Protection of the Rights of the Child (SPARC), had mentioned that increasing the FED in February was a good step and the policy should continue in the next budget. Keeping the World Health Organisation’s recommendation in consideration, Pakistan should increase taxes at regular intervals so that inflation and per capita income are accounted for and Pakistanis remain protected from the harms of tobacco products.

Copyright Business Recorder, 2023