ISLAMABAD - Philip Morris Pakistan Limited (PMPKL) has underscored the urgency for immediate measures to tackle the escalating presence of low-priced non-tax-paid cigarettes, which has resulted in a loss of a level playing field and a significant decline in volumes within the legitimate tobacco sector.
In a media briefing in Islamabad to address the profound challenges gripping the tax-paid cigarette industry in Pakistan, Head of Communications at PMPKL Andleeb Uroos Ahmed, highlighted an alarming 86% decrease in total income for the fiscal year 2023, shedding light on the detrimental impact of Federal Excise Duty (FED) hikes and the escalating market share of non-duty paid illicit cigarettes in the country.
Andleeb Uroos Ahmed elaborated that substantial excise increases tend to inflate the prices of tax-paid cigarettes, further exacerbating the price gap as the tax-evading sector disregards these hikes. This scenario has provided ample opportunity for numerous local illicit cigarette manufacturers, notably in Khyber Pakhtunkhwa (KPK) and Azad Jammu & Kashmir (AJ&K), to amass substantial market share while contributing minimally to national revenue.
Statistics unveiled during the briefing painted a stark picture of a massive surge in illegal cigarettes across Pakistan after the FED hike in February ‘23, with illicit cigarettes now commanding a staggering 63% market share and causing an annual dent of approximately PKR 310 billion to the exchequer. While acknowledging government efforts such as the introduction of tax stamps (track & trace system) to combat illicit tobacco trade, she expressed deep concerns about the lack of across-the-board enforcement, allowing the non-tax-paying industry to flourish.
Stressing the critical need for decisive action to safeguard the interests of tax-paying entities and ensure sustainable revenue collection for the government, she suggested including tax-evading cigarette manufacturers in the tax net instead of burdening the legitimate industry with additional taxes.
