Industry urges government to stop sale of illicit cigarettes

Illicit trade costs exchequer Rs40-50b annually


Our Correspondent November 01, 2018
Illicit trade costs exchequer Rs40-50b annually. PHOTO: FILE

LAHORE: The legitimate tobacco industry in Pakistan has urged the government to curb the sale of illicit cigarettes through early introduction of the fiscal marking system.

Rather than repeatedly going through failed Request for Proposals (RFPs), it said, the government should introduce models which could provide a level playing field for all taxpayers and give illicit cigarette manufacturers a tough time.

“For almost a decade, we have been hearing the Federal Board of Revenue (FBR)’s claim that illicit cigarettes cost the national exchequer around Rs40-50 billion annually,” the stakeholders said. “However, majority of these illicit cigarettes, which have around 35% market share, are produced in Khyber-Pakhtunkhwa and Azad Kashmir. If these illicit operators are known, what is stopping the government from taking action,” they asked.

The new government recently made amendments that were incorporated into the supplementary budget in order to control the sale of illicit cigarettes. In an interview, the finance minister stated that the government was considering introducing a track and trace system to limit the supply of illicit cigarettes.

The stakeholders pointed out that it was not for the first time such a technology was being considered, adding the primary reason for all the previous failed attempts was that the RFPs were flawed and anti-competitive.

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“A number of specifications in the most recent RFP were in violation of the PPRA Rule 10 as they favoured a single vendor, thus making the RFP anti-competitive. The Competition Commission of Pakistan, in its policy note to the FBR dated March 9, 2018, highlighted these concerns which led the FBR to make amendments in the RFP in mid-2018,” they said.

 

Published in The Express Tribune, November 1st, 2018.

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COMMENTS (1)

Zameer Chaudhry | 5 years ago | Reply Interesting to note how manufacturers of smuggled cigarettes - like Benson & Hedges - call themselves “legitimate tobacco industry”. If a cigarette does not have a pictorial health warning in Pakistan, then it is smuggled - i.e illicit. Full electronic track and trace is the only solution to ensure the illicit industry fails. The two big manufacturers do not want this to happen - the last two paras of the above report are a clear indication of how they prefer a watered down system - which will allow them to play the dirty game. World over, electronic track and trace systems are working and catching thieves. If PMI and PTC are so pious, why don’t they propose this themselves.
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