At a time when the government has increased taxes and duties on all the non-essential items to meet the IMF targets, the illicit cigarette trade alone is causing an annual revenue loss of over Rs 24 billion to the national exchequer.
An official source said Tuesday that the revenue loss is not resulting from the smuggling of famous international brands but from the evasion of taxes and duties by local brands, which have a quarter of the market share.
He said the multinational firms are demanding strict implementation of taxes and duties on local manufacturing units as they are rapidly losing market share due to the price difference.
The government has imposed tax on cigarettes of Rs 40 per packet. The majority of the local brands, however, are available at the price range of Rs 25 to Rs 35 per packet.
For gaining more market share, the local brands are offering instant cash prizes, motorcycles and tractors through “lucky draw”. The Ministry of National Health Services and Regulations appears to have completely abdicated its responsibility of curbing such blatant violations of the health laws.
In addition to the Ministry of Health, more than a dozen government agencies regulate cigarette manufacturing and distribution in the country. The local manufacturers are estimated to produce 20 billion cigarettes per annum. Such a huge quantity of cigarettes involves extensive operations from buying of raw materials, to tobacco processing, storage facilities and distribution networks. However, the manufacturers still manage to get a lower declaration on raw materials, including tobacco crop, cigarette paper, and filter rods leading to evasion of excise duty and sales tax on cigarettes.
A retail audit report of Nielsen estimates that illegal cigarettes have a market share of at least 23.7 per cent of the overall cigarette market in Pakistan. As much as 89 per cent of this illegal trade is non-taxed. In 2014, more than 19.5 billion illicit cigarettes were sold in Pakistan. During the last six years, this illegal trade has grown by 43.5 per cent while the tax-paid cigarette volume has declined by 11 per cent.
Keep cigarattes aside. Worry about increasing the Tax-base, check foreign exchange going out of the country in billions of Dollars. Not worried about the loss to this poor nation about the trillions of Dollars siphoned by the Rich Mafia of the country through Hundi, money-mules ( like Ayan Ali type) and dozens more ? Who owns those US$ 200 bn of Pakistanis in the Swiss Banks – all black money. Isko kahte hain Ashrfiyan looten aur Koele pe mohar !
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