Illicit cigarettes’ consumption increases due to heavy taxes: NGO

LAHORE: With increase in taxes on legal cigarette manufacturers, the illicit tobacco trade and consumption have increased significantly and the smokers switched to cheaper, tax-evaded brands following the imposition of FED last year.

“About 62.4% of smokers are preferring brands priced between Rs80 and 120 after the price increase. This is also evident from the fact that the market share of illicit cigarettes has reached over 54%, according to a recent report,” said spokesperson of NGO-Umeed-e-Sehar.

The spokesperson urged the government to fully implement the ‘Track and Trace System’ and strictly monitor its effectiveness across the tobacco industry, terming it the only solution to curb illicit tobacco trade and consumption while increasing revenue collection by 310 billion rupees.

Moreover, a recent study revealed that the market share of duty paying, legal cigarette manufacturers has gone down from 55 billion sticks in FY 2021-22 to 29.6 billion sticks in FY 2023-24, whereas the illicit sector has flourished in the said period, reaching 51.4 billion sticks, from 30 billion sticks in FY2021-22. It is interesting to note that the total market size has marginally reduced by xx percent only, as illicit sector filled the gap created by higher prices of duty paid brands.

“The government must go with full force to implement T&T in the remaining production lines of cigarette manufacturers while also strengthening border control to curb smuggling,” the spokesman said, adding that these initiatives will not only curb cigarette consumption but boost the economy.

Copyright Business Recorder, 2024