ISLAMABAD: The illicit trade of cigarettes is causing the national exchequer an estimated loss of Rs40billion annually.
It was told by sources that the Federal Board of Revenue (FBR) should be appreciated for unprecedented crackdown on the illicit trade of cigarettes. The government should continue to develop and implement strategies to combat the illegal cigarette trade in Pakistan. In this regard, the Inland Revenue Enforcement Network (IREN) FBR was established in last year who seized approximately Rs1.63 billion worth of non-duty-paid cigarette packs and raw material of illicit cigarettes.
The sources told CT that, under the supervision of IREN, the RTO Peshawar confiscated the highest quantity of illicit cigarettes of 35.6536 million packs up to March FY17-18 whereas the Enforcement Hub I&I-IR Karachi impounded 1.25 million packs during said period whereas 1.46 million packs were seized by the I&I-IR Hyderabad, 5.35 million packs were seized by RTO Sahiwal, 350000 packs seized by RTO Faisalabad, 2.5 million packs confiscated by BTB ZONE RTO-II Lahore and I&I-IR Lahore, 5.60 million packs impounded by RTO Sialkot and I&I-IR Lahore while 1.37 million packs were taken into possession by RTO Rawalpindi.
Talking about the impact of illicit trade in the country, the sources said that illegal trade creates a wide price-gap between the legal and tax evaded cigarettes which is the key driver of demand for tax evaded cheap cigarettes widely available across the country. It was added that it declines revenues of about Rs40billion annually. Lack of a level playing field for the taxpaying sector discourages both domestic and foreign investment that in turn adversely impacts the economic growth, job creation and technology transfer in Pakistan. The total cigarette consumption has not reduced in Pakistan and rather remained stable due to the presence of cheap illicit cigarettes, the sources told.
It was told that key reasons for the widespread availability of smuggled cigarettes in Pakistan include demand factors like cheaper prices and no health warnings, and supply factors like fiscal and regulatory differential with Afghanistan, challenging border with Afghanistan, and higher profit margins for retailers.
The sources told CT that Pakistan shares a long mountainous border with Afghanistan. The terrain itself is so challenging that it is not easy for customs and other law enforcement agencies to have effective border controls. This facilitates smuggling into Pakistan which is not just restricted to inflow of cigarettes while many other products including tiyres, tiles, cloth and tea worth billions are smuggled annually across this border.
