June 27, 2016
President Pakistan Businessmen and Intellectuals Forum (PBIF), President AKIA, Senior Vice Chairman of the Businessmen Panel of FPCCI and former provincial minister Mian Zahid Hussain on Monday lauded the decision of the Federal Board of Revenue (FBR) to implement tax stamps on cigarette packs to curtail tax evasion.
The decision will help the Apex tax body to raise at least Rs.30 billion in taxes while it will pave way for expansion in the units of legitimate taxpayers while attracting heavy foreign investment, he said.
Mian Zahid Hussain said that despite a regulatory regime in place to reduce smoking in Pakistan, the government has not been able to achieve its desired results but the recent decision of FBR may discourage the trend.
He said that illicit cigarette sector continue to increase its share in the market to over 23 percent hitting revenues and alarm legitimate players in the industry who are forced to carry increasing tax burden.
Increasing regulatory and fiscal burden on the tax paid segment, more and more consumers are switching to the illicit substitutes offered by the largest tax evading sector in the country.
He said that the illicit sector includes smuggled cigarettes, counterfeit products, and tax evaded cigarettes which cost around Rs30 billion per annum.
He said that Philippines and Malaysia have already successfully used latest technology to curtail their respective illicit trade issues.
Tax evaded cigarettes usually comply with all the local printing requirements, making it extremely difficult to differentiate them from the cigarettes made by the legitimate players in the industry.
The introduction of such a visual marker would allow law enforcement officers to monitor the trade of tax evaded cigarettes.
The government should amend Federal Excise Rules to hold retailers responsible for selling cigarette below printed price, introduce spot fines and summary trials, he said.
Pakistan ranks fourth in Asia on account of its share of illicit cigarette consumption while the province of Khyber Pakhtunkhwa tops in producing and distributing tax evaded cigarettes throughout country.