ISLAMABAD: Pakistan is one of the top markets for the illicit tobacco trade in Asia, and the market share of these illegal manufacturers have increased from 35pc to 42pc in the last three years.
As per a survey conducted by Oxford Economics, in 2017, a total of 77.8 billion cigarette sticks was consumed in Pakistan, of which 11% cigarettes were illegally smuggled into the country, and 31% were locally manufactured tax-evading cigarettes.
The local tax-evading manufacturers use a unique way of evading taxes. In the big markets of the country, these manufactures do print the mandatory Graphical Health Warning (GHW) and the minimum regulated prices but are sold less than the printed price.
The minimum price regulated but the government is Rs62/pack but these local manufacturers sell at the price of Rs25-30/pack. They also under-declare their production to evade taxes.
On the other hand, recently, the Society for the Protection of the Rights of the Child (SPARC) held a survey in the Pakistani market and claimed that the presence of illegal cigarette in the country is the only 16pc.
According to the details shared by the official of SPARC, the survey was conducted in 10 most populated cities by Studying Tobacco Users of Pakistan (STUP) and evaluated over 8,000 packets of cigarettes to know how many cigarettes are being smuggled or illegally sold and STUP found that almost 16% of cigarettes are being sold illegally but these results are less than the claims of the tobacco industry.
The survey methodology that was used in this survey seems flawed as it only focuses on one element within illegal cigarettes i.e. smuggled cigarettes, which do not comply with the government’s GHW mandate).
The methodology does not take into account locally manufactured tax-evading cigarettes, because as per the survey methodology only those packets were considered which did not have the GHW and hence those with GHW were ignored.
Ignoring the local illegal cigarettes packs being sold leaves behind only the smuggled cigarettes what only hold the 11pc of the market share while the 31pc of the market share still belongs to the illegal local manufacturers. This is further validated by PM Imran Khan’s speech on multiple occasions where he has highlighted the market share and tax recovery from the industry.