TTS consortium asks FBR for 340pc hike for affixing stamps

ISLAMABAD: The consortium of AJCL Private Limited and Authentix Inc, a US-based company, has asked the Federal Board of Revenue (FBR) to increase the per-pack cost by up to 340 percent for placing Track and Trace System (TTS) stamps on each cigarette pack.

The current price of stamp on pack stands at Rs 758 per 1000 cigarettes and now the licensees propose to jack it up to Rs 3,335 for 1,000 cigarettes. The consortium has asked the FBR to jack up the per-pack price by up to 340 percent arguing that since the rupee-dollar parity fluctuated and the consumption of cigarette packs declined, there must be an upward adjustment in the stamp cost.

The consortium has given many scenarios but in totality, the proposed increase in 1000 cigarette stamps could result in hiking up to 340 percent.

If this move is accepted by the FBR, the tobacco giants fear vaporisation of their financial viability which is already into the danger zone in the aftermath of the last two hikes in the Federal Excise Duty (FED) by 200 percent, said the representatives of both tobacco giants Pakistan Tobacco Company and Philip Morris in background discussions with The News here on Friday. The consortium also argued that they were informed that four billion sticks would be stamped but the consumption of cigarettes declined so they were facing difficulties to make their business viable. This huge increase in the track and trace cost would further incentivise non-implementation of track and trace by the illicit manufacturers.

Prime Minister Shehbaz Sharif has recently constituted a committee to ascertain the reasons behind the failure to implement the TTS for various sectors, especially in tobacco. If such a disincentive is created against the formal sector then the business of the tax-compliant sector will witness irreparable loss in the months ahead.