Illicit Cigarettes Causing Loss Of Billions Rupees To National Exchequer: PTC

ISLAMABAD, (UrduPoint / Pakistan Point News - 7th Nov, 2023) Pakistan Tobacco Company (PTC) on Tuesday said increase in illicit cigarettes could potentially cause a revenue loss of approximately Rs 310 billion to the national exchequer during the current fiscal year (2023-24).

Briefing the media, Area Head of Legal and External Affairs, Asia Pacific, middle East and Africa (WEST) at BAT Group Mona Iskandarani highlighted the importance of fast implementation of on the efficacy of the Track and Trace (TT) System in the tobacco sector, said a news release here.

“In order to ensure that the quantum of illicit trade is controlled within the country, it must be coupled with strong enforcement and fiscal measures.

“We acknowledge the recent enforcement initiatives undertaken by the Federal board of Revenue (FBR) in Pakistan but we need sustained enforcement efforts across the supply chain to curb the menace of illicit cigarette trade in Pakistan,” she concluded.

Director Legal & External Affairs Asad Shah, PTC pointed out that TT system had been implemented in various countries in one form or the other, but the system did not offer a silver bullet solution to fight illicit trade, and only served as a tool to facilitate law enforcement agencies to carry out raids and seizures of tax evaded products.

While talking to the participants, he apprised that despite a lapse of 15 months since the implementation deadline, only 2 out of over 40 cigarette manufacturers had implemented Track & Trace in true letter and spirit.

The incidence of illicit trade has only grown ever since the implementation of a track & trace system whereas it was supposed to reduce duty and tax evasion in the tobacco sector.

The participants were also informed that since the implementation of track & trace in Pakistan, 1st July 2022, illicit sector will grow from approximately 37% in FY 2021/22 to approximately 63% by the end of FY 2023/24.

The illicit manufacturers are openly flouting laws by using counterfeit stamps, by placing stamps over the polypropylene wrapping on a pack of cigarettes.

Some players are even applying stamps on cigarette packs manually, which defeats the whole purpose of a track & trace system in Pakistan, which is to monitor production volumes.

Illicit cigarette packs without a Graphical Health Warning and without track & trace stamps are being sold in the market openly.

Majority of Duty Not Paid (DNP) cigarettes are being manufactured in AJK and strict enforcement measures need to be taken at entry and exit points of AJK to ensure that no tax evaded cigarettes make their way into the country.