LAHORE: More than 1.6 billion illegal (non-tax paid) cigarettes are smoked on an average every month in Pakistan.

“Approximately, one out of every four cigarettes consumed in Pakistan is illicit which is 137 basic points higher than the global average,” according to a report on ‘The Challenge of Illicit Trade in Cigarettes: Impacts and Solutions for Pakistan,’ launched here on Tuesday.

According to the report, the national exchequer suffers a loss of Rs24 billion annually due to this practice. More alarmingly, Pakistan ranks fourth in Asia on account of its share of illicit cigarette consumption.

During the last six years, the illicit segment has grown by 43.5 per cent and the tax-paid cigarette’s volume has declined by 11pc. On an average, approximately one billion cigarettes are being added to the illicit segment every year in Pakistan, says the report.

Besides undermining health policy objectives

Later, an interactive workshop was held to discuss the report based on the research conducted by Nielsen in July 2005 on the request of Pakistan Tobacco Company Ltd and Phillip Morris Pakistan Ltd.

The participants evolved a consensus that price differential between legal and tax-evaded cigarettes was a major challenge the government was facing that undermined its public health objectives, one of which was to curtail cigarette consumption.

The participants also agreed that formulation of effective policies and practical steps at governmental level, coupled with social awareness and coordination among stakeholders, were essential to curb illicit cigarette trade in the country.

Communication expert Aniq Zafar said the government’s expected initiative to introduce tax stamps on cigarette packs would be a significant move towards discouraging non-tax paid cigarette trade and promoting legal tobacco sector.

However, hiring the services of a foreign firm for printing tax stamps on cigarette packs in the presence of several indigenous printing houses would be detrimental to the national economy, said Mr Zafar.

Jawwad Riaz, Senior Manager, Nielsen Pakistan, said alone in Pakistan, nearly 19.5 billion illicit cigarettes were consumed in 2014, out of which 17.3 billion or 89pc were local non-duty paid ones. He said more than two billion cigarettes were being smuggled into Pakistan as well and being added to the illicit trade each year.

“Overall, 23.7pc of the total cigarettes annually sold in Pakistan are illicit. In addition to billions of rupees in revenue loss to the government, local non-duty paid cigarettes undermine the country’s public health objectives by giving easy access to the youth and encouraging them to smoke by selling cigarette packs below the minimum tax payable on a packet. Shortly put, the pervasive illicit cigarette trade continues to grow by leaps and bounds,” he said.

Published in Dawn, July 20th, 2016