Cigarette production figures rigged to evade tax: SDPI – Journal


ISLAMBAD: The Institute for Sustainable Development Policy (SDPI) said powerful lobbies were involved in rigging the figures for cigarette production in the country to gain benefits from the authorities.

The SDPI study titled “Regional Tobacco Tax Regime and Its Health Implications” released on Saturday said the tobacco lobby in the country was powerful because of its connections in power corridors and demanded tax breaks what they said to fight illicit trade.

The study found that the excise duty imposed on cigarettes in Pakistan remained the lowest compared to other countries in the world, resulting in a huge increase in cigarette consumption and loss of income.

The SDPI study suspects that tobacco companies are fudging cigarette figures to evade tax, she said, adding that while consumption figures stand at 86.6 billion cigarettes per year, Official industry figures remain limited to just 55 billion.

The SDPI said the remainder is usually attributed to illicit trade, but the volume of illegal trade does not exceed 9%, which is well below the high figure of 41% reported by companies.

The ruling elite should also keep their distance from the tobacco industry, the study suggested, adding that this is very important because the industry would use it as a vehicle for its influence and interest.

The study suggested that a uniform tax system should be applied at all levels in order to control tax evasion, urging the government to abolish the tier system that provided opportunities for tax evasion to tobacco companies. The one-tier system would not only help to strengthen the income generation mechanism, but also the problem of illicit trade could be dealt with effectively.

In Pakistan, there are 22 million smokers, 60% of whom are adolescents, and as a result, 1.5 million cases of oral cancer are reported annually by the Pakistani Medical Association, the SDPI report notes.

The study added that the government should take strict measures to reduce the tobacco lobby’s immense influence over all legislative bodies and avoid giving tax breaks to multinational companies, he said.

The study said laws against tobacco products, including cigarettes, should be implemented in letter and spirit as well as without any discrimination.

The study said that apart from that, the statistically false claim by tobacco companies regarding the illicit trade in cigarettes should be dismissed and no favors should be offered to them on tax matters, she said.

Posted in Dawn on May 30, 2021

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