ISLAMABAD-The Society for the Protection of the Rights of the Child (SPARC) on Wednesday organized a launching event for the policy brief ‘Facts vs Industry Narrative: Cigarette Production and Taxation in Pakistan’, published by Social Policy and Development Centre (SPDC).
Principal Economist of SPDC Muhammad Sabir on the occasion said, “There are three listed companies which are the country’s major cigarette producers, accounting for more than 90% of total cigarette production in Pakistan. These include Pakistan Tobacco Company (PTC), Phillip Morris Pakistan (PMPK), and Khyber Tobacco Company.”
Analysis of the financial statements of these companies reveals that the net turnover and gross profit of the companies altogether increased from 72 billion Rupees during Jul 2021 – Mar 2022 to 94 billion Rupees during Jul 2022 – Mar 2023. Gross profit also increased from 33 billion Rupees to 46 billion Rupees during the same period.
During the quarter of Jan-Mar 2023, when tax rates were increased substantially and declared production declined to half, companies’ profits did not fall, he said.
“The tobacco industry is under-reporting its production to avoid taxes. If it is not, then the industry shouldn’t have any complaints about the increased taxes because its profits have increased,” Muhammad Sabir added.
Country head of Campaign for Tobacco-Free Kids (CTFK) Malik Imran stated, “As far as the tax revenue is concerned, the total tax revenue paid by these companies (including FED and GST) has increased from PKR114.5 billion in July 21-March22 to PKR127.5 billion in the first nine months of the current fiscal year, representing a growth of 11.3 percent.”
He mentioned, “Cigarette manufacturers operate solely for their own profit and they don’t care whether economy or public health suffers.”
“The analysis presented in the policy brief refutes the cigarette industry’s claims about the negative impacts of higher cigarette taxes, Imran added.