Budget proposal by DG I&I: manufacturers oppose tax stamping on cigarette packets

The multinational cigarette manufacturing companies and local units of Mardan have strongly opposed a budget proposal of the Directorate General of Intelligence and Investigation Customs Federal Board of Revenue of tax stamping on the cigarette packets to identify smuggled/non-duty paid packets to check evasion of the Federal Excise Duty by the cigarette industry.
Sources told Business Recorder here on Thursday that the proposal to paste stamps on cigarette packs has been floated by the DG Customs Intelligence at a recent meeting to review budget proposals of the cigarette industry at the FBR House. It was proposed to introduce a scheme to affix quality assurance 'excise duty stamps' on every packet of cigarettes to check illicit/counterfeit production of cigarettes.
Local industry as well as the multinational companies argued that the tax stamping on each packet of cigarette would substantially increase the cost of cigarettes. Such a proposal would unnecessarily increase the cost of each packet of cigarettes. The cost would increase due to import of machinery to be used for tax stamping and process adopted for pasting stamps before distribution of the finished product in the market.
At the same time, there is no assurance that production of counterfeit cigarettes would be stopped after tax stamping on cigarette packets. Local cigarette manufacturers were of the view that if the counterfeit manufacturing of local cigarettes could take place, then the counterfeit tax stamping could also take place. Another question arises that how the tax department would enforce the tax stamping on each cigarette pack and how the decision would be implemented in small cities and far-flung areas. If the customs intelligence remained unable to check the supply of counterfeit cigarettes in the country, what is 100 percent guarantee of success of the new scheme? Units of Mardan further stated that if the multinational companies are ready to introduce the concept of tax stamping on the cigarette packets, they are also ready to implement the same proposal.
One of the representatives of the multi-national companies informed the meeting that Malaysia has implemented the tax stamping on cigarette packets, but the selling of non-duty paid cigarettes is still taking place in the country. This shows that even if quality assurance 'excise duty stamps' have been affixed on every packet of cigarette, there is no guarantee that the production of counterfeit items would be eliminated.