Local cigarette brand tax evasion is hurting the economy

Islamabad: Local illicit cigarette makers are luring young people with cheap illegal brands, industry experts complain.

According to them, traders in major markets in urban centers are openly selling illegal packs of cigarettes at a price of around Rs15-Rs35, which is well below the minimum price of Rs62.76 set by law for a pack of 20. cigarettes.

Over 200 brands of local illicit cigarettes are selling at Rs20-Rs40, while the minimum charge per pack is Rs42.12 and the minimum price is Rs62.76.

Experts told ‘The News’ that breaches of the minimum tax and minimum price law undermine the government’s fiscal goals as well as the public health agenda.

They insisted that consumers were buying illegal cigarettes because their manufacturers, by avoiding both excise and sales taxes, were able to offer them at lower prices, making them much more affordable than legal tax-paid cigarettes.

Experts said the makers of illicit cigarettes have not only rattled the economy, but also flouted the country’s national health laws.

According to a study, about 1,200 children between the ages of 6 and 15 start smoking daily in Pakistan, but the government and related institutions need to assess the exact cause of this tendency to smoke.

Experts have expressed concern about the rising trend in youth smoking and wondered how an underage child could buy cigarettes.

They asked if every underage child bought a full pack of cigarettes or if they were offered the option of bulk cigarettes so they could use their pocket money to get one or two sticks.

Experts said who was to blame, the price of cigarettes in general or weak law enforcement.

They said the law enforcement did not check the traders to prevent them from selling illegal brands, which were available around Rs 20-35 for 20 packs of cigarettes and secondly also stopped them from selling bulk cigarettes, thirdly, to take tough action against the traders involved. in the sale of cigarettes to minors.

Industry experts believed that the illicit cigarette manufacturing mafia would benefit if the tax increased, as taxpayer manufacturers would comply and raise their prices, but illicit cigarette manufacturers are not complying with this, leading to a downgrading of consumers to cheaper and less expensive products. quality products.

Former Federal Bureau of Revenue Chairman Shabbar Zaidi has estimated that the tobacco sector has the potential to generate revenue of over Rs 150 billion with strict enforcement of rules and regulations, curbing smuggling of imported brands of tobacco products and stopping the sale of locally produced non-tax products. paid brands.

Experts have urged the government to come up with a long-term strategy to tackle the tobacco ‘mafia’ and control tax leakage, saying the initiative will not only help increase tax collection but also block access from children and young people to discount brands and bulk cigarettes.

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