Economist challenges anti-tobacco organizations on illicit trade debate

Says they are on a spree to misguide government and policy makers

Appalling facts have surfaced about the cigarette industry in Pakistan causing concern among    decision-makers and the public.

Pakistan’s cigarette industry is under a cloud of confusion, fueled by contradictory statements and false statistics from anti-tobacco organizations. These misleading narratives are not only misleading decision-makers and the public but also providing cover for tax-evading cigarette manufacturers who are more interested in securing foreign funding than in any sincere commitment to public health or the country for that matter.

“I challenge all these organizationswho make false claims in the name of public interest/health with false data points to come and do a market survey with me. I assure the facts will be completely opposite to what they claim. Their motivation seems to be greed, which drives them to support the agenda of illicit cigarette manufacturers,” said Junaid Khan-a senior economist.

“Roughly 4 studies have surfaced in the last one year, that are just done to pacify the masters who pay these ATO’s to cause disruption in Pakistan similarly to what India used to do by penetrating sleeper cells within the country to instigate violence. If they are paid USD2 million a year, nobody knows where the money goes but people working in these organizations are the real beneficiaries,” he added.

A study titled “Incidence of Illicit Trade of Cigarettes in Pakistan: A Case Study for Islamabad Capital Territory,” allegedly by the World Health Organization (WHO) and a few anti tobacco organizations, claimed that the illicit cigarette market in Pakistan ranges from 9 to 17 percent of the total market. This figure is significantly lower than estimates from domestic and foreign research institutes. There are 26 cigarette manufacturers registered with FBR, out of which 2 pay 98% of total tobacco tax. Does any research question the remaining 24 companies? No! because these 24 companies also put a fair share in ATO’s bucket.

The mentioned research is technically flawed because the research is based on collection of empty cigarette packs. No data has been collected on the price at which these illicit non-tax paying brands are sold. FACT: Locally manufactured tax-evaded brands have both the picture health warning and the correct price printed on them. But because they are non-tax paid, they sell for a fraction of the printed price. This empty pack survey research is useless. That reflects the true predicament of tobacco control in Pakistan.

What is unfortunately funny is that in another report published Human Development Foundation (HDF) titled “Study to Assess the volume of illicit cigarette brands in Pakistan” states that illicit cigarette trade in Pakistan is only 17% while in the same report the researchers have given data that 71.06% of cigarettes were being sold for PKR 30-60. How blinded can these so-called anti-tobacco organization be by their greed of foreign funding? In what world is a PKR 30 cigarette packet legal? According to their own research it is being established that illicit cigarette incidence in Pakistan is at least 71.06% - add to that 10.37% of no price mentioned taking the illicit cigarette incidence in their own sample to 81.43%! Could it be that these individuals are perhaps unaware of the full extent of the illicit cigarette trade? The data they present clearly indicates that, in their sample, at least 81.43% of cigarettes are illicit. Yet, they still maintain that only 9-17% of the market consists of illicit cigarettes. This raises questions about whether they might be unintentionally downplaying the issue, inadvertently providing cover to illicit cigarette manufacturers. A proposal document titled” Recovering healthcare costs and saving lives: - An urgent call for tobacco tax increase in the budget 24-25” released on 16th May 2024 in association with HDF, SPDC. Chromatic, CRD, Aurat Foundation and Indus Hospital proposes increase in tobacco tax will increase government revenue but nowhere mentions illicit trade or the need for enforcement.

My question is simple. The biggest threat to tobacco control in Pakistan is the wide presence of cheap illicit non-tax paying cigarettes. How come not a single anti-tobacco advocate has raised a concern on this issue. The answer is simple – they are giving cover to the illicit cigarette operators. And they are pushing for higher taxes since they know that the biggest beneficiary of increase in taxes is simply the non-tax paying illicit cigarette sector, the demand for which grows with every tax increase. I request Prime Minister Shahbaz Sharif to investigate these so-called anti-tobacco organisations and find out what their real agenda is. I request the Prime Minister to investigate why these so-called anti tobacco organisations are not worried about the growing presence of cheap non-tax paid illicit cigarettes in Pakistan, Junaid Khan added.

Illicit trade is a menace that will destroy Pakistan and its economy. If these foreign fundings are not stopped, they will continue to hamper government efforts and leave its people in shambles. The only beneficiary will be the owners of anti-tobacco organizations and the illicit cigarette manufacturers.

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