LAHORE: Despite the increase in tax rates, graphical health warnings and imposing a health levy on cigarettes, the proportion of illegal sales of cigarettes is on rise and the production and sales volume of the tax-paying cigarette industry is constantly shrinking.

There has been no significant decline in demand and sales of cigarettes despite the increase in government tariffs on cigarettes in Pakistan. Illicit cigarette consumption in Pakistan is 32.6 billion sticks, out of 80 billion sticks annually. The market share of the illicit trade of cigarettes is about 40 percent in Pakistan, causing a loss of Rs80 billion annually to the national exchequer through tax evasion, analysts said.

It is pertinent to mention that only two tobacco companies pay 98 percent of the taxes while the other illegal tobacco companies contribute just 2 percent to the government’s revenue. These figures call into question the government’s policy of sticking to the only way to impose a tax on cigarettes to protect public health.

“These figures show that despite the government’s continued efforts to discourage smoking, demand and sales of cigarettes have remained stable over the years, with all credit going to illicitly sold cigarette brands which are giving smokers the opportunity to continue using cheaper cigarettes,” said an independent expert of the industry.

Copyright Business Recorder, 2022