ISLAMABAD - The tax stamp proposal recently floated by Federal Board of Revenue has created havoc among local and multinational cigarette manufacturers.

Small Cigarette Manufacturers Association (SCMA) and Pakistan Procurement Regulatory Authority that are continuously blaming the policy makers for their recent decision of pressurising local industry by putting tax stamps on cigarette packs.

According to industry sources, some leading international companies like fracture code, 3M, Sicpa, Atos and siemens have written detailed letters to FBR expressing their concerns regarding the request for proposal (RFP) for tax stamps supervision system, highlighting a number of serious issues with proposal. These issues include restrictive e nature of the RFP favoring a particular outdated technology, insufficient time for bidders to respond, absence of requisite technical information by FBR and a number of procurement lacunas.

“All the stakeholders are of the view that the technology favored by FBR for tax stamps is paper-based, excluding modern digital solutions and is much more expensive than competing technologies”, industry sources said.

Industry sources disclosed that some of the companies have also requested the FBR for further technical and financial details, as the present RFP is silent on many points including the selection criteria. These information gaps need to be addressed for submitting a competitive proposal. PPRA and a number of other stakeholders have identified a number of violations by passing procurement rules by FBR. These include clear violations of rules 10,13, 15, 23 29 and 36 of public Procurement Regulatory Authority (PPRA) 2004 such as circumventing pre-qualification processes, not mentioning any procurement method or selection criteria in tender documents and avoiding low cost proposals.

On the other hand, according to Small Cigarette Manufacturers Association, this new step of FBR may put into jeopardy livelihoods of thousands of people in the poor and downtrodden areas of Khyber Pakhtunkhwa by subjecting the small industry players to unjustified cost increases. The Tobacco industry is of the view that the tax stamp initiative would further widen the price gap between legit and illicit brands, giving a boost to the illicit trade in the country, which currently stands at around 26pc.