LAHORE: The government policies and national laws need to be applied uniformly to protect the industries that provide tax revenue to Pakistan from the growing fears of illegal, smuggled and unregistered products.

“The federal government, FBR, and other relevant government agencies need to apply laws and policies uniformly to limit the impact of Pakistan’s fast-growing undocumented economy on legal industries”, said Syed Saifullah Kazmi, Head of Investment Banking at Intermarket Securities Limited. As per international research report on tax evasion, around Rs 310 billion of tax is being evaded by five key sectors i.e. tea, tobacco, tyre and automobile lubricants, pharmaceuticals, and real estate. Only tobacco sector is denting Rs 80 billion to the national exchequer due to no checks and balances on illegal trade.

Kazmi said that the legit cigarette industry is among the sectors which were facing a crisis due to the non-uniform application of laws and policies and mushroom growth of illicit trade. “About 40 percent of the market share has been captured by the illegal cigarette industry, which stood at 20 percent a decade ago. If the government policies continue in the same direction, the illicit cigarette market will increase more, due to which not only the legal sector will be affected, but will also cause a revenue loss to the government tax collection and lead the ways in money laundering,” said Saif.

He stated that an appropriate and efficient pricing policy is necessary to curb illicit trade. Due to inconsistent policies, the price gap between legal and illegal cigarettes has climbed to over 100 percent. The tax-paying cigarette industry is selling their brands at a minimum price of Rs 71 per packet set by the government, while various illegal cigarette brands across the country are being sold at Rs 30 per packet, he said.

Copyright Business Recorder, 2023