Pak government can collect an additional Rs50 billion yearly from the tobacco sector if it pays attention to control the illegal cigarette trade via strict enforcement measures. Philip Morris Pakistan Managing Director Roman Yazbeck said this.
Yazbeck said, “It is natural the government wants more revenue through taxes from the tobacco sector, however, it cannot take place if half of the market does not pay taxes and is engaged in illicit trade.”
The government need to increase taxes and also consider moderating price elasticity. He said this at a virtual press conference.
Furthermore, he said, “The share of non-tax-paid cigarettes has increased up to 50% from 33% due to increase in excise duty and taxes over the past two consecutive years ie 53% and 23%, respectively.”
He said that the minimum consumer price of a legal tax-paid cigarette pack was Rs63. However, the illegitimate counter-brands were sold at Rs25 per pack.
In Pakistan, Philip Morris and Pakistan Tobacco Company control 98% of the legitimate market. Opposing the illegal cigarette trade has been a demand for multinational firms for years now.
Illicit cigarette trade in not just limited to Pakistan. Other countries are also going through the same issue.
He said, “Similar is the case in Pakistan, the increase in taxes and the share of illicit industry is going to hurt government revenue in this fiscal year and it is increasingly becoming impossible for us to do business in such an environment.”