'Govt can earn Rs44bn extra by regulating tobacco trade'.

Byline: Nasir Jamal

LAHORE -- The government could collect Rs44 billion additional tax revenue annually by regulating rapidly growing illicit tobacco trade in the country through strict enforcement of the law, claims Roman Yazbeck, the managing director of multi-national tobacco firm Philip Morris Pakistan.

The share of the informal, non-tax-paid cigarette trade in Pakistan, one of Asia's largest markets where 80-85bn sticks (packing comprising 10 packets) are sold annually, has risen from 34.7 percent to 50pc in the last two years, according to an industry estimate based on a retail audit.

Normally, the ratio of the share of legal cigarette industry to the illegal trade is 90-10 in most countries. As opposed to the other markets, the smuggled brands form a fraction of the illegitimate trade in Pakistan where the informal industry is flooding the shops with cheaper brands.

The industry blames growing price gap between legitimate industry brands and illicit non-tax-paid ones for the rapidly increasing illicit cigarette trade.

The government has twice raised excise duty on cigarettes by 46pc and 32pc in September and June 2019, expanding the price differential from 53pc to over 100pc in certain cases.

'It is natural for a government to raise its revenues through taxes from the tobacco sector to discourage smoking (because of public health issues). We are happy to pay taxes and get regulated. But it cannot take place if half of the market engages in illicit trade and does not pay taxes,' Yazbeck told this reporter during a video call from the United States.

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