Rawalpindi:The government has finally started controlling illicit trade through broader controls, raids and implementing trade and trace across the board. The Ganjamndi police and Customs staff in Rawalpindi seized a cache of smuggled cigarettes, estimated to be worth Rs8 million. The cigarettes were found in a warehouse in the Ganjamundi area and were being stored without paying customs duties.The police action came after a tip-off from a local resident. The police raided the warehouse and found the cigarettes, which were packed in boxes and ready for sale. The cigarettes were all foreign brands not procured through legal channels.
The police have arrested the owner of the warehouse, and are investigating how the cigarettes were smuggled into the country. They are also investigating who the intended buyers of the cigarettes were.
The seizure of smuggled cigarettes is a victory for the government’s efforts to curb the illegal trade of tobacco products in Pakistan. The government has recently increased taxes on cigarettes in an attempt to discourage smoking, and the illegal trade of cigarettes is a major source of revenue loss for the government.
Health advocates argue that the Federal Board of Revenue’s Track and Trace system has effectively limited illicit trade to below 15%. They recommend that all companies adopt this system to reap further benefits. The tobacco industry manipulates the inflated percentage of illicit trade to influence policymakers into avoiding tax increases proportional to inflation.
Tobacco-related diseases impose an annual economic burden of Rs615 billion, equivalent to 1.6% of Pakistan’s GDP. Despite causing such significant damage to public health and the economy, the tobacco industry audaciously opposes any measures aimed at mitigating the harm. Activists emphasised that every budget season, the tobacco industry exploits the issue of illicit trade to prevent increases in tobacco taxes. This serves as a smokescreen to divert attention from their underreporting practices. These companies deliberately understate their production and sell unreported products on the black market, resulting in billions of losses for the national treasury. Imran referred to recent research on illicit cigarettes in Pakistan, which revealed that around 15% of cigarette packs were illicit.
Health advocates argue that the tobacco industry should not resist paying additional taxes, as they never actually bear the burden themselves. Tobacco companies have raised their prices excluding taxes, leading to the excise tax share in the retail price remaining at 51.6%, well below the widely accepted benchmark of 70%. Tobacco is the leading cause of preventable deaths in Pakistan, claiming the lives of over 170,000 people annually. Imran explained that increasing prices reduce production and consumption, thus alleviating the burden on public health costs.
