According to a report from the "Quick Forum News" on April 19, Philip Morris Pakistan Limited is urging authorities to take action against illegal trade in order to combat the increasing number of tax-free products on the country's tobacco market.
The communications manager of PMPKL stated in a press conference that the company's revenue plummeted by 86% in 2023. He attributed the decrease in income to the increase in federal consumption tax (FED) last year, which doubled the price of cigarettes and subsequently led to an increase in market share of illegal products.
Critics of the tax hike argue that it has provided ample opportunity for many local illegal cigarette manufacturers, especially in Khyber Pakhtunkhwa and Azad Jammu and Kashmir, to gain significant market share while contributing very little to national revenue. Illegal cigarettes now hold 63% of the market share, resulting in the loss of 310 billion Pakistani rupees ($1.1 billion) in tax revenue for the government every year.
Ahmed expressed support for the government's implementation of measures such as stamp duty, while also voicing concerns about lax enforcement. She emphasized the benefits for taxpaying companies and the government's need for sustainable revenue, suggesting that tax-dodging cigarette manufacturers be brought into the tax net instead of burdening legitimate industry with additional taxes. She calculated that by reducing tax evasion, the Federal Board of Revenue (FBR) could potentially increase tax revenue from the tobacco industry by over $2 billion.
She added, "If the potential income is realized, it can make a significant contribution to human development projects and public health initiatives in Pakistan, addressing key areas where Pakistan lags behind in human development rankings.
At the same time, she believes that anti-tobacco organizations have been misleading the government and spreading misinformation about the tax revenue potential of the legal tobacco industry.
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