A Reuters file photo showing ash tray with cigarette butts.
The Prime Minister’s Office, in a letter sent to the FBR and Ministry of National Health Services, Regulations and Coordination, emphasised that keeping in view the health and economic implications, the premier had taken a serious notice of the situation and desired that a countrywide crackdown should be launched on priority to curb the sale of illicit cigarettes.
Tobacco use is one of the major causes of serious illness and death in Pakistan. The unrestricted sale of illicit cigarettes is impeding various measures taken by the government to effectively address the public health issue. Besides, the sale of illicit cigarettes is also causing considerable loss to the national exchequer on account of tax evasion.
“The Ministry of National Health Services and the FBR are requested to take further necessary action in the matter accordingly. A monthly progress report should also be submitted to this office for the prime minister’s information,” the PM said in the letter.
According to reports, around 87 million illicit cigarettes are consumed every day in Pakistan due to their lower prices and are said to cause an annual loss of Rs35-40 billion to the national exchequer.
These cigarettes attract the youth due to easy access at lower prices and have become a big challenge for the Ministry of National Health Services and the FBR. Government departments concerned have failed to control the marketing of illicit cigarettes.
According to a study conducted by Oxford Economics, Pakistan is ranked number one in the trade of illicit cigarettes in Asia, with a total volume of 32.6 billion illicit cigarettes consumed in 2017. The primary reason for the existence of illegal manufacturers and traders is the tax-driven price differential between legal and illicit brands, which currently stands at 130%.
The legitimate tobacco industry in Pakistan has been pleading the government to take action against the sale of illicit cigarettes. These illicit cigarettes account for about 35% of the market share and most of these are produced in Khyber-Pakhtunkhwa and Azad Kashmir.
The government has been taking different measures to curb the sale of illicit cigarettes in the country but there has been no success.
“The government is also taking initiatives to bring more people into the tax net and action should be undertaken in this regard as well,” a market source said, adding that the FBR should initiate steps against cigarette smugglers and tax-evading cigarette manufacturers in the country in order to increase tax collection and discourage the use of such cigarettes by the youth.
Published in The Express Tribune, September 24th, 2019.
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