FBR task force to curb illegal cigarette trade

LAHORE

Federal Board of Revenue (FBR) has constituted a joint task force Inland Revenue Enforcement Network on illicit tobacco/cigarette trade following the surge in illegal cigarette trade which has reached alarming level of 40 percent of total trade.

An official of the FBR disclosed that the probe reports carried out by the Board revealed that some local brand cigarettes was heavily involved in the non-duty and tax paid sales in the market or wrongly declared its quantum to the national exchequer.

In the light of these reports, the Board has constituted the enforcement network under the supervision of CCIR, RTO Rawalpindi, as central coordinator.

The enforcement network has been empowered to conduct raids in different cities all over country and confiscated illegal cigarettes, including tax evaded imported cigarettes and locally produced duty non-paid cigarettes.

However, where the FBR is conducting raids and gearing up their efforts to clear the market of these illegal cigarettes, there are certain development organisations that are undermining their efforts and continue to disregard the government’s concern over this serious threat of a growing black economy, the official disclosed.

The official said that estimated loss to the national exchequer was around Rs47 billion annually due to this illegal trade.

According to an estimate, in 2016, more than 32.5 billion illegal cigarettes were consumed in Pakistan making the country one of the largest in Asia.

This high prevalence of illegal trade in cigarettes in Pakistan is in sharp contrast to Bangladesh and Sri Lanka, where such trade has drastically declined over the years due to strict enforcement of laws, he added.

Due to vast difference in prices, more and more consumers are purchasing widely available cheap illicit substitutes. Over the last five years, the prices of cigarettes have increased by more than 100 percent whereas local duty evaded cigarettes continue to sell at very low prices creating a price differential of approximately Rs47 between a legitimate and illegal packet. Furthermore, these packets sell even lower than the minimum taxes applicable per pack.

Recognising the negative effects of illegal cigarette trade, the Board is actively now raising the issue at various fora and carrying out enforcement drives all across the country.

The official of the tobacco industry said they supported the all-out effort of the government to curb the illegal trade of cigarettes.

They said that on many occasions they helped out the FBR and other departments to counter such activities in market besides pointing out and tipping off wrongdoing by anyone in the sector.

They said the industry supported the FBR for creation of a specialised enforcement network to curb the illegal cigarette trade