ISLAMABAD: Pakistan is expected to receive around Rs185 billion in taxes from the cigarette industry this year.

Capital Calling, a network of academic researchers and professionals, has stated that some cigarette makers were trying to mislead the government into lifting these taxes from the sector.

It urged the government to stand firm on its decision to raise taxes on tobacco products. Rubbishing a recent statement by the tobacco industry, the network stated that it was unrealistic to develop a causal relationship between higher taxes and the sale of illegal cigarettes.

It is worth mentioning that a representative of the tobacco industry had recently claimed that if the government did not rationalise the policy of managing the threshold price level and did not restrict illicit trade, its revenues too would decline after two years.

According to a statement, the cigarette industry paid Rs150 billion in tax in the fiscal year 2021-22, and the expected tax receipts this year would be around Rs185 billion.

Citing a survey by a civil society group, it stated that only less than 15 percent of the market share goes to illicit cigarette consumption.

One in six cigarette packs consumed in Pakistan could be illicit. “These figures are far less than those propagated by the tobacco industry,” the statement added.

The network cited research by the University of Cape Town and the Ministry of Health Pakistan that concludes that only 13 percent of cigarettes consumed in Pakistan are illicit.

According to the Pakistan Tobacco Board, the industry contributes over Rs200 billion annually to the country’s economy.

“The illegal cigarette trade, estimated to be worth around Rs26 billion annually, deprives the government of much-needed revenue through taxes. This is contrary to the claim of Rs70 billion annually,” it stated.

“The illicit cigarettes in the market are basically from multinational brands, indicating that these multinational tobacco companies are beneficiaries of this illegal activity in one way or the other. These illicit cigarettes are sold at higher prices as imported brands. However, local brands suffer the most in a market flush with illegal international tobacco products,” it stated.

Published in Dawn, April 20th, 2023