ISLAMABAD: The Chairman of Pakistan Tobacco Company, Mueen Afzal and members of the management board expressed deep concern over loss of volume to the illicit cigarette industry, which continues to grow unabated.
This observation was made during a meeting of the Company’s Board here on Wednesday, where concern was raised to curtail the rapidly expanding illicit cigarette industry that is not only harming the legitimate industry but also evading billions of rupees’ worth of taxes from the Government.
According to announcement of the company here on Wednesday, Pakistan Tobacco Company has announced its results for the nine Months ended September 30, 2016, declaring net turnover of Rs 35,594 million, after tax profit of Rs 8,269 million and earnings per share of Rs 32.36.
The leading multinational cigarette manufacturing company has contributed over Rs 70 billion to the Federal Board of Revenue (FBR) in the form of duties and taxes during the nine months ended September 30th 2016.
The legitimate tobacco industry is facing immense pressure due to exponential growth of duty evaded segment, led largely by the excise driven price increases, the recent one being in Jun’16.
Despite recovery in key economic indicators, the consumer wallet remained under pressure. Hence excise led price increases had further stretched the consumer and widened the price gap between legitimate and local duty evaded cigarettes.
This accelerated significant down trading to duty evaded segment resulting in a steep decline in legitimate industry volumes and loss in Government revenues.
The higher price of duty paid cigarettes relative to average household incomes has increased the incentive for consumers to look for lower priced alternatives which are easily available due to lack of enforcement by relevant authorities.
The need of the hour therefore is to ensure across-the-board enforcement of laws and regulations for all cigarette manufacturers in the country. This can help plug the gaping revenue leaks caused by the illicit cigarette industry for improved revenue contribution to the Government exchequer by the total industry.
