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ISLAMABAD, Jun 4 (APP): Director of the Pakistan Tobacco Company (PTC), Asad Shah here on Wednesday expressed grave concern over the surge of illicit cigarette trade.
In a pre-budget media briefing, he revealed that illicit cigarettes now comprise 58% share of the market, while the total annual size of the cigarette industry in Pakistan is around 82 billion sticks.
Shah said, the sector has the potential to contribute Rs 570 billion annually in tax revenue, but only Rs 292 billion was collected in FY 2023-24, and Rs 223 billion so far in the first 11 months of the current fiscal year.
Twelve years ago, the government collected taxes on 67 billion sticks, but currently, only 34 billion sticks are being taxed.
The legal sector now holds only a 42% market share but contributes 98% of the revenue, he added.
Shah urged for strict enforcement of documentation policies across the entire industry, noting that the government-set minimum price for a cigarette pack is Rs 162.25, whereas 18 billion sticks are being sold at or below Rs 150 per pack, evading taxes.
He pointed out that no one has ever been penalized for violating the minimum price law.
He recommended raising the minimum pack price to counter the perception of cigarettes being cheap in Pakistan.
“No policy can succeed without non-discriminatory implementation,” he stressed, adding that locally manufactured cigarettes without tax stamps are openly sold.
Shah said that if the track-and-trace tax stamp policy was not implemented uniformly, it would lose its effectiveness.
He recommended reducing the adjustable tax on cigarette filter material (Acetate Tow) from Rs 44,000 per kg to Rs 4,000 per kg to curb smuggling.
This year, 450 metric tons of smuggled acetate tow has been seized by the authorities. Shah also proposed that adjustable tax should be imposed on cigarette paper to ensure complete documentation.