ISLAMABAD: Pakistani markets are once again flooded with smuggled and non-duty paid cigarettes with no tax stamps, causing billions of rupees loss to the national exchequer.
A survey of markets of federal capital revealed that smuggled cigarettes are openly being sold in posh markets despite the implementation of the track and trace system on the documented tobacco sector.
Tax experts told Business Recorder that the Federal Board of Revenue (FBR) needs to fully implement the track and trace system across the board to curb cigarette smuggling to maximize tax collection and provide a level playing field to the industry players. According to a new research study, the illicit cigarette trade has been causing an annual loss of Rs24 billion to the national exchequer.
Recently, Prime Minister has shared data that the illicit trade of cigarettes has caused a revenue loss of Rs100 billion, but according to independent experts, the figure stands at about Rs. 24 billion.
Experts pointed out that the previous Pakistan Tehreek-e-Insaf (PTI) government had started the track and trace system in the cigarette industry to keep a full record of the production and sale of the product in the market. The system was also helping the government to boost its tax revenues through actual sales of cigarettes in the market.
Under the track and trace system, each cigarette pack was labeled with a specific code that consumers and the government can identify easily. After the arrival of Finance Minister Ishaq Dar and Tariq Pasha (SAPM on Revenue) in the FBR, the implementation of the track and trace system needs to be enforced in the remaining manufacturing units operating in the industry.
The survey revealed that different foreign non-duty paid and smuggled cigarette brands like Parliament, Benson & Hedges, Milano, Dunhill and other foreign brands are easily available in the market of big cities to far-flung villages with no track and trace seals on their packets. The said smuggled brands from other countries cannot be documented under the track and trace regime.
Officials and industry insiders said the easy availability of non-duty paid and smuggled cigarettes in the open market would lead to an increase in the consumption of cigarettes among the young population, besides increasing a health burden. They have demanded the government to stop the sale of non-duty paid cigarettes and smuggling of cigarettes and establish the writ of the state. They said the tobacco industry in Pakistan was paying billions of rupees in taxes annually, but those manufacturing and selling illicit cigarettes were causing billions of rupees in tax evasion.
So far, only three companies have successfully implemented Track and Trace system i.e. British American Tobacco, Philip Morris International, and Khyber Tobacco Company. The two former companies are multinational companies whilst the latter is a national manufacturer. No other national manufacturer is compliant with track and trace.
Copyright Business Recorder, 2022