ISLAMABAD: Prime Minister (PM) Imran Khan on Monday ordered a countrywide crackdown on the illegal import of cigarettes which cause the national kitty an annual loss of Rs35 billion.
A letter instructing for a clampdown over the illicit activity in the country has been issued by the PM Office to the Health Ministry and Federal Board of Revenue in this regard.
The letter states that large-scale and growing illegal trade of local and international cigarettes has been taking place in the country which needs to be curbed.
“Keeping in view it’s implications on health and the economy, the prime minister has taken a serious note of the above situation and desires a country-wide crackdown be launched against the sale of illicit cigarettes on priority,” the letter further reads.
The PM’s Office also directed the health ministry and FBR to submit a report in this regard on a monthly basis.
Currently, the market share of illicit cigarettes stands at 33 per cent while the share of the legitimate industry is at 67 per cent yet local manufacturers contribute only 2 per cent of the total tax collected by the government from the tobacco industry.
In the financial year 2018-19, the national exchequer received a tax contribution of Rs115 billion out of which Rs113.5 billion was paid by two companies having a 67 per cent market share while local manufacturers only paid Rs1.50 billion rupees.
In addition to this, the lack of enforcement activities and huge price gap between the legal and tax-evaded cigarettes is one of the key reasons for the increased demand for cheap tax evaded cigarettes widely available across Pakistan. Shopkeepers in major markets are openly selling illegal cigarette packs with a price of around Rs20 to Rs35 which is far below than the minimum price of Rs63 set by the government.
As per the Oxford Economics Study, Pakistan ranks first in the illicit trade of cigarettes in Asia, with a total volume of 326 billion illicit cigarettes consumed in 2017.
On the other hand, Local cigarette companies are also continuously playing with tobacco advertisement laws. Various SROs and laws of the Ministry of National Health Services, Regulations & Coordination prohibit advertisement campaigns outside shops, use of human elements in promotion campaigns. However, these laws are being openly violated by local cigarette manufacturers and they are targeting youth by doing illegal advertisement campaigns by using human elements on promotional campaigns and placing posters, boards and branding material out of shops and kiosks.
According to official resources, it is hoped that with the latest strict directions from PM’s office, authorities will increase efforts to enforce laws and will curb the menace of illicit trade of tobacco to avoid huge exchequer losses.