LAHORE, May 24: Counterfeit and smuggled tobacco products sold in the local market are said to be depriving the government of billions of rupees in tax revenue

A source associated with the industry says that the government measures to check the smuggling of the tobacco products in to the country have failed to deliver.

He said although smuggling stopped for a brief period on post-9/11 sealing of Pakistan-Afghan border, it has again shot back to the pre-Sept 11 levels. The source, who asked not to be named, blamed a “flawed regulatory and legal framework for the situation.”

The revenue losses to the national kitty from smuggling in the current fiscal year are estimated to be about Rs3-4 billion.

The industry complains that the “counterfeiting of the branded cigarettes has assumed alarming proportions in the last 10 years” during which the trade volume rose to 1.2 billion sticks, two per cent of the market. For the government, the executive claimed, it accounts for loss of Rs840 million.

Smuggling of foreign cigarettes is also stated to have gone up in the recent years. As against 28 smuggled brands selling in the domestic market in 1999, now 58 such brands are now available.

The industry puts total volumes of the smuggled cigarettes for the current fiscal year at three billion sticks, or 5 per cent of the market. “We fear that the volume of smuggled cigarettes would increase in the near future as the government prepares to open up Afghan transit trade, the traditional source of smuggling,” added the executive.