KARACHI: The huge 31 per cent hike in federal excise duty (FED) on tobacco sector could not help grow revenue for the national exchequer.
This was revealed during a workshop, organised by CRS Strategic Communications at a local hotel. During the ongoing fiscal year, 31 per cent FED increased for the tobacco sector, while only 9 per cent revenue growth recorded after hike in FED during the corresponding period. This could be compared to 23 per cent FED in fiscal year 2014-15 when the revenues grew by 17 per cent.
In the previous financial years 2013-14 and 2012-13, the FED increases were 15 per cent and revenues growth were recorded at 16 per cent in FED revenue from the tobacco sector.
On the occasion, the speakers argued that formulation of effective policies and practical steps at governmental level coupled with social awareness and coordination among stakeholders are essential to curb mushroomed illicit cigarette trade in Pakistan.
Nielsen Pakistan Senior Manager Jawwad Riaz, while sharing a study conducted by Nielsen Pakistan, said that the price differential between legal and tax-evaded cigarettes like Cricket, Gold Street, Olympic, Hero, Gold Cup, Melburn and Press etc. are the major challenge the government is facing in curbing the menace of non-availability of level playing field for the legal tobacco industry.
Riaz added that one in every four cigarettes in the country is illicit, adding alone in Pakistan, nearly 19.5 billion illicit cigarettes were consumed in the year 2014, out of which 17.3 billion or 89 percent were local non-duty paid. More than two billion cigarettes are smuggled into Pakistan as well and added into the illicit trade each year, he said.
“Overall, 23.7 percent of the total cigarettes annually sold in Pakistan are illicit. In addition to billions in revenue loss to the government, local non-duty paid cigarettes undermine the country’s public health objectives by giving easy access to youth and encouraging youth smoking by selling cigarette packs below the minimum tax payable on a cigarette pack. Shortly put, the pervasive illicit cigarette trade continues to grow leaps and bounds”, the study said.
