Tax collection from cigarettes likely this year

Islamabad:Pakistan government is expected to collect an additional revenue of at least Rs60 billion after increasing the federal excise duty (FED) on tobacco products, social activists said on Friday, while rejecting multinational tobacco industry’s claim of illicit cigarettes in the market.

The multinational tobacco companies continue to falsely claim since 2014 that share of illicit cigarettes is 40% of the market. This number is used consistently to cause panic in the government. According to independent studies the actual share of illicit cigarettes in the market is around 18 per cent. A major part of this illicit actually belongs to multinational brands.

Now that track and trace system has been put in place, the possibility of illicit trade of cigarettes has almost died down, said Malik Imran, country head Campaign for Tobacco Free Kids.He said that they have conducted a survey to explore the volume of illicit cigarettes in the market. He says that though the findings of the survey will be made public next week, “tentatively we can say the volume is now negligible”.

He said multinational cigarette makers are deliberately spreading the propaganda in the market that volume of illicit trade is increasing after the rise in taxes on cigarettes, which is a blatant attempt at pressuring the government.

There has been an increase in revenues of international cigarette brands this year according to their own reports. “Track and trace system has been implemented fully and no industry is now able to do illegal business,” he categorically stated.

He said it is estimated that cigarette consumption has plummeted after the recent taxes on tobacco. He said due to the decline in consumption, health cost of cigarettes is expected to come down to one billion dollars from over three billion dollars annually.

Malik further pointed out that after increasing the taxes on cigarettes, the volume of expenditure on tobacco related deceases annually would also be reduced from Rs620 billion to Rs200 billion.

Sanaullah Ghumman, secretary general of Panah, said the increase in the FED on cigarettes was in line with the recommendations of the World Health Organisation (WHO), therefore the public should support the government’s move to discourage tobacco consumption.

He said the government should stand by its decision of increase in the FED as this would help collect additional revenue of Rs60 billion from taxes on the cigarettes.