LAHORE: The illicit cigarette trade not only burdens the national treasury but also poses a significant hindrance to the government’s health policies aimed at protecting public health.
Despite the introduction of the technology-based surveillance system known as the “Track and Trace system,” to combat illicit tobacco trade in Pakistan and protect the national exchequer from losses, a significant number of illegal tobacco companies have yet to install the system, sources said, adding: “The cigarette industry in Pakistan faces a significant challenge with high rates of illicit trade and tax evasion. Shockingly, the illegal sale of cigarettes amounts to a staggering Rs 240 billion in annual losses to the national exchequer.”
Surprisingly, only two regulated cigarette companies contribute 98% of the taxes in this sector, while the remaining 52 companies, comprising 48% of the market share, contribute a mere 2% in taxes, the sources said, adding: “Despite over 50 companies being registered with the Pakistan Tobacco Board, only a few have implemented the track and trace system.”
It may be noted that the former prime minister also directed the FBR to ensure Track & Trace implementation by August 1st 2023, and shops should not have illicit cigarettes on the counter post the stated date.
The northern region of the country has become a hotbed for illicit production and trade of cigarettes, with many illegal companies based in Azad Jammu and Kashmir and Khyber Pakhtunkhwa.
Moreover, influential individuals owning cigarette companies in KPK are also contributing to losses in the national exchequer through illegal production and sales, the sources added.
Copyright Business Recorder, 2023
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