ISLAMABAD: The tobacco industry has expressed concerns over both the Federal Board of Revenue (FBR) and the Ministry of Health for failing to stop the sale of cheap smuggled cigarettes even without health warnings.
Talking to the media on Saturday spokesperson of Pakistan Tobacco Company (PTC) Sami Zaman said that illicit cigarettes would capture over half of the market in the next quarter.
“The smuggled cigarettes do not pay taxes that is why they are cheaper, do not have the mandatory graphic health warning as per the laws of Pakistan and offer attractive flavours that are even sold in lose packs,” Mr Zaman said.
He even criticised the health activists for not raising their voices against the smuggled and unregistered cigarettes manufactured in the country.
The government imposed a high rate of duties up to 160 per cent in February making production too costly, he said, adding that the market has been largely taken over by unchecked smuggling of cigarettes that are cheap as there are no taxes and duties over them.
The revenue collection target from the cigarette industry in 2022-23 was Rs180 billion, but despite the high tax rate collections remained limited to Rs174bn due to suppressed sales.
The legitimate cigarettes industry witnessed a production decline of 44 per cent in June this year and the overall sales drop was 28.4pc in 2022-23.
Mr Zaman said that the industry had announced to purchase 85 million kgs of raw tobacco but it could secure only 72m kgs and the supply shortage had led to a price rise in the current season.
As a result, the investors have entered the tobacco market, and the minimum tobacco support price was Rs310 per kg but it went up to Rs1,400 per kg, which has currently reduced to Rs1,000 per kg.
Published in Dawn, August 20th, 2023