Islamabad: Philip Morris Pakistan Urges Swift Action Against Rise of Non-Tax-Paid Cigarettes, Leading to Losses in Legal Tobacco Sector.

In a press conference tackling the pressing issues facing Pakistan’s tax-paid cigarette sector, Andleeb Uroos Ahmed, Head of Communications at PMPKL, emphasized an alarming 86% decline in annual revenue for fiscal year 2023. The discussion revealed the adverse effects of Federal Excise Duty (FED) increases and the rising dominance of non-duty paid illicit cigarettes in the market.

Ahmed explains how significant excise hikes inflate prices of taxed cigarettes, widening price gap as tax-evading sector ignores increases.

This situation has created abundant chances for many regional illegal cigarette producers, particularly in Khyber Pakhtunkhwa (KPK) and Azad Jammu & Kashmir (AJ&K), to gain significant market share with minimal contribution to national income.

New Stats Show Alarming Rise in Illegal Cigarettes Post February 2023 Tax Hike, Dominating 63% Market Share and Costing Rs310 Billion Annually to Exchequer.

While appreciating government initiatives like tax stamps (track & trace system) to tackle illegal tobacco trade, she voiced serious apprehensions regarding inconsistent enforcement, enabling growth of untaxed sector.

Highlighting the urgent necessity for proactive measures to protect tax-paying entities and maintain steady government revenue, she proposed integrating tax-evading cigarette producers into the tax system instead of imposing extra taxes on the lawful industry.

Ahmed emphasized that cracking down on tax evasion could lead to a potential revenue increase of over 2 billion US dollars from the tobacco industry for the FBR.

“The prospective income, if actualized, could make a substantial impact on human development endeavors and healthcare programs in Pakistan, targeting key areas where the nation falls behind in human development indices,” she stated.

She highlighted how several anti-tobacco groups are misinforming the government, unintentionally aiding the illicit tobacco industry by spreading false information about revenue from legal tobacco.

Uroos Warns Tax Hike and Poor Enforcement Could Harm Revenue and Public Health Goals.

She expressed optimism for collaborative efforts between industry and government to address challenges, aiming for fair competition among stakeholders.