Tobacco Industry’s deceptive claims on Illicit trade of tobacco products


Islamabad:   (Parliament Times)    In an online press briefing session, Mr. Azhar Saleem, CEO of Human Development Foundation (HDF) stated that tobacco industry is again active during the pre-budget time period in order to influence the opinions of policy makers and avoid higher taxes in the upcoming fiscal budget by falsely claiming that illicit trade of cigarettes has increased which results in revenues losses for the government. The pre-budget time is crucial for policy makers for increasing the taxes on tobacco products.
In a recent article, investigative journalists, through a raid by tax officers on one of the abandoned factory of tobacco giant, found out that 60 million sticks of cigarettes were present at the location, all of which were illegally manufactured by the tobacco giant. Meanwhile, tobacco industry published an ad in a national newspaper and claimed that illicit trade of cigarette is causing Rs. 44 billion in losses to national exchequer. Through a sponsored research study, the industry claims the illicit trade to be at 44%. In 2017-18, through a new tax structure announced by the government, the tobacco industry caused a loss of Rs. 42 billion to the government revenues which is almost 50% of the revenues collected the year before.
Mr. Malik Imran, representative of Campaign for Tobacco Free Kids (CTFK) stated that last year, in response to this claim of industry, two research studies were jointly conducted by Human Development foundation (HDF), Pakistan National Heart Association (PANAH) and Fikr-e-Fardan Organization (HDF). Both the studies showed the volume of illicit trade of cigarettes to be at 10% to 15%. Recently, another study was conducted by ASTRA in 10 major cities of Pakistan which revealed that the volume of illicit trade of cigarettes is 16%. The study was conducted over seven months with a total of 8,589 sample packs of cigarettes as sample.
In another study conducted by Social Policy and Development Centre (SPDC), it was found that the industry under reports its total production and evades taxes as a result. The undocumented cigarettes are being sold by the industry in black market, with the intention to increase illicit trade. The industry claims that illicit trade increases whenever the prices of cigarettes are increased through higher taxes. These studies and investigations necessitate the implementation of a transparent and fair Track and Trace system which will help in reducing the illicit trade of cigarettes. Through this under reporting, the industry caused a loss of Rs. 37 billion in 2016-17 in government revenues.
Mr. Azhar Saleem also stated that tobacco industry is causing an economic burden of Rs. 192 billion per year. Tobacco use causes over 166,000 deaths annually in Pakistan and increases the financial and health burdens of the users. He urged the government to not be influenced by these tactics of the industry and increase the taxes on tobacco products as this is a time and again tested as effective tobacco control measure throughout the world. Higher taxes on tobacco will lead to more revenues and limit the access of youth to this deadly product.