LAHORE - According to study of Euromonitor International on consequences of illicit cigarettes trade for Pakistan, the global research body paints a very bleak picture for the country viz-a-viz this illegal trade in tobacco, rampant across the country, industry representatives claimed.
Regarding the losses to national exchequer caused by the illicit cigarettes trade, it is estimated that government incurred staggering Rs.80 billion revenue losses over the past five years due to this illegal activity.
“This amount is approximately equivalent to 11 percent of the funds approved by federal government for Public Sector Development Programme (PSDP) in financial year 2011-2012”, the study reported.
Industry sources observed the last two years (2010-11) data shows of that the government exchequer suffered loss of Rs.17.6 billion and Rs.18.5 billion respectively.
Legitimate cigarettes production is an important source of revenue for government and the illicit trade in cigarettes, on the other hand, contributes not a single penny in the national kitty.
The incurring tax revenue losses caused by illicit cigarettes trade have another bad dimension for the national economy when it compels the country to remain dependent on the foreign aid for its economic needs.
A more serious issue which comes forth because of this illicit trade in cigarettes is shaking investors’ confidence in Pakistan to do the legitimate business when illegal trade thrives without any check on part of the government.
Effective governance is crucial for gaining investors’ trust as they need assurances from government that their investments will remain safe with the protection from unfair competition posed by non-compliant businesses.
In 2011, the country’s reputation suffered badly when USA placed Pakistan alongside eleven other countries on its Priority Watch List with regards to breach of Intellectual Property Rights (IPR). “Such moves dent Pakistan’s reputation and hence undermine its ability to attract foreign direct investment”, the study observes.
The illicit cigarettes trade is also promoting organized crime in the society without any fear of law to act against it. Because of gaining the reputation for being low-risk and high-reward business, it entices more “perpetrators-to-be” to its growing fold.