Tag: Pakistan

  • Pakistan Tobacco Sales Plunge After Tax Hike

    Pakistan Tobacco Sales Plunge After Tax Hike

    Image: Skórzewiak

    Cigarette consumption in Pakistan dropped by 20 billion sticks following an unprecedented increase in the country’s federal excise duty (FED), reports the Associated Press of Pakistan, citing figures from Capital Calling.

    In February 2023, the government hiked the FED by 146 percent, following several years of comparatively small increases.

    In its study, Capital Calling found that the tax hike prompted 14 percent of smokers to quit, which caused cigarette consumption to decline by 11 billion sticks. Ten percent of smokers reduced their intake, which drove consumption down by an additional 9 billion cigarettes, according to the study.

    In 2022, Pakistan’s total cigarette consumption was estimated between 72 billion and 80 billion sticks, a figure that includes officially declared production, smuggled cigarettes, counterfeit products and cigarettes for which duties have not been paid.

    According to the new study, the volume now stands at around 62 to 64 billion sticks.

    Capital Calling expects the Federal Board of Revenue to collect between PKR230 billion ($809.87 million) and PKR240 billion in cigarette duties this year. In 2018, the figure was PKR87 billion.

  • Pakistan Urged to Swap Tobacco For Food

    Pakistan Urged to Swap Tobacco For Food

    Photo: Taco Tuinstra

    Pakistan should replace tobacco with food crops, according to experts in nutrition, agriculture and the environment, reports UrduPoint.

    Speaking with the Associated Press of Pakistan, the specialists said such a transformation is necessary not only to improve public health but also to overcome the food insecurity faced by more than one third of the population.

    In 2018, 36.9 percent of Pakistanis struggled with food insecurity, data from the National Nutrition Survey reveals. Massive floods at home and war in Ukraine have plunged an additional 2.5 million people into hunger according to the Pakistan Fruits and Vegetable Importers and Exporters Association (PFVA).

    The group says Pakistan now relies on imports for food items such as wheat, pulses, chickpeas, garlic and ginger. However, a prevailing shortage of hard currency makes it difficult for importers to obtain letters of credit.

    PFVA Chief Waheed Ahmad urged policymakers to capitalize on this year’s World No Tobacco Day theme, “Grow Food, Not Tobacco.”

    Tobacco is grown in all four provinces and is a significant part of Khyber Pakhtunkhwa’s economy, where farmers cultivate approximately 30,000 ha of the golden leaf.

    Taimoor Khan, general secretary of the Khyber Pakhtunkhwa Association for Excellence in Agriculture, suggested that if half of this area were converted into growing a new variety of garlic, NARC G1, the farmers would make a remarkable profit.

    Khan also called into question the economic contribution of tobacco farming, which is believed to generate revenues of PKR120 billion annually ($416.24 million). The cost of dealing with the health impact of tobacco consumption exceeds the tobacco tax take by a factor of three, he said.

    “By transforming tobacco farming to food production, we can create ripple effects that promotes food security, improves public health, contributes to the overall well-being of our communities and benefit the environment,” said Aftab Alam Khan, CEO of Resilient Future International.

    The speakers also cited research showing that tobacco cultivation requires heavy use of pesticides and fertilizers, which causes soil degradation, thus lowering the used land’s capacity to grow other crops.

    According to the National Health Services in 2018, almost 23.9 million adults currently use tobacco in any form in Pakistan. Around 163,600 people die each year in the country due to tobacco and almost 31,000 of these deaths are due to exposure to second-hand smoke.

    Critics of “Grow Food, not Tobacco” campaign have suggested that the theme creates a false dichotomy, as tobacco and food production are not mutually exclusive.

  • Track-and-Trace Honored in the Breach

    Track-and-Trace Honored in the Breach

    Image: alien185

    Only two out of the more than 40 cigarette manufacturers in Pakistan have properly implemented the country’s track-and-trace system, according to British American Tobacco, reports The Nation.

    Speaking during a media briefing organized by the Pakistan Tobacco Company (PTC) in Islamabad, BAT’s area head of legal and external affairs for the Asia Pacific, Middle East and Africa regions, Mona Iskandarani, stressed the importance of timely implementation and enforcement of the track-and-trace system.

    “We acknowledge the recent enforcement initiatives undertaken by the Federal Board of Revenue in Pakistan but we need sustained enforcement efforts across the supply chain to curb the menace of illicit cigarette trade in Pakistan,” said Iskandarani.

    PTC’s legal and external affairs director, Asad Shah, pointed out that while track-and-trace systems have been implemented in various countries, the system does not offer a silver bullet. Rather, it serves as a tool to facilitate law enforcement agencies to carry out raids and seizures of tax evaded products, he said.

    Despite a lapse of 15 months since the implementation deadline, only two out of over 40 cigarette manufacturers have implemented the track-and-trace in true letter and spirit, Shah lamented. Instead of declining, tax evasion has grown in the tobacco sector since the system became mandatory, he said.

    The share of illicit cigarette sales is projected to grow from 37 percent of the market in fiscal 2021-2022 to approximately 63 percent by the end of fiscal 2023-2024, potentially causing the government lose PKR310 billion ($1.08 billion) in tax revenues in fiscal 2023-2024.

  • Cigarette Production Plunges in Pakistan

    Cigarette Production Plunges in Pakistan

    Photo: hassan

    Tobacco companies in Pakistan produced 43.9 billion cigarettes in 2022-2023, down from 64.7 billion in the previous fiscal year, reports The News International, citing figures from the Federal Board of Revenue’s (FBR) track-and-trace system.

    The country’s leading manufacturers, Pakistan Tobacco Co. and Philip Morris International, suffered year-to-year production declines of 32 percent and 39 percent, respectively. The production of Khyber Tobacco, by contrast, jumped 48 percent in the most recent financial year.

    The FBR collected tobacco revenues of PKR62.9 billion ($224.3 million) from July to September this year, compared with revenues of PKR177.7 billion in the comparable 2022 quarter.

    The FBR undertook 1,447 “actions of enforcement and seizure with confiscation” during the most recent financial year, according to FBR Project Director of Track and Trace Zaheer Qureshi

    The government is reportedly exploring strategies to boost revenue as part of an anticipated mini-budget in December.

    During a discussion on tobacco taxes, FBR officials attributed lamented the challenges posed by a limited workforce, logistical hurdles and an undocumented economy.

  • Growers Want Amends for Below-Market Prices

    Growers Want Amends for Below-Market Prices

    Photo: Taco Tuinstra

    Tobacco growers in Pakistan have asked tobacco companies to compensate them for tobacco purchased at below-market prices and losses caused by rains and hailstorms in Khyber Pakhtunkhwa Province, reports The News International.

    In a letter to their representative organizations, the farmers said that independent purchasers paid high price while some domestic and multinational companies purchased the produce at a lower rate.

    They urged the organizations to take up the matter with the companies to repay the growers for the lowest price. The tobacco growers also urged the companies to tap into the corporate social responsibilities fund to accommodate the growers.

    Pakistan law requires tobacco companies to spend a certain percentage of their profit on the welfare of farmers.

  • Pakistan Trace System Rolled Out by Year’s End

    Pakistan Trace System Rolled Out by Year’s End

    Image: Tobacco Reporter archive

    Pakistan’s track-and-trace system is expected to be fully installed throughout the tobacco industry by the end of December 2023.

    Two multinationals and one local tobacco company have already installed the Federal Board of Revenue’s (FBR) new automated system while six local companies have installed manual track-and-trace systems.

    Some local companies have raised concerns about the cost of the systems, prompting The Business Recorder to urge the government to offer discounts or installment payments on the equipment.

    According to the FBR, revenue from the tobacco sector has increased following the implementation of the system, with a major increase in the rates of the federal excise duty on cigarettes.

  • Growers Protest Foreign Companies

    Growers Protest Foreign Companies

    Image: hodim

    Tobacco growers in Pakistan held a protest against multinational cigarette manufacturing companies, alleging noncompensation of the tobacco rate procured from growers, according to the Business Recorder.

    “When [the] season began, the tobacco growers provided the crop to the companies on PKR425 [$1.47] (per kilogram), and later it surged to PKR1,400,” said Iqbal Shewa, vice chairman of the Farmers’ Group. Despite repeated requests, the companies are not giving any monetary compensation to the growers on the procurement rate, according to Shewa.

    Growers are on the verge of monetary losses reaching PKR20 million due to noncompensation, according to Shewa. He said that instead of solving the issue, the companies are using delaying tactics.

    It was noted that the growers’ alliance held multiple meetings with the companies to no avail.

  • Pakistan Poised to Enact Tracking System

    Pakistan Poised to Enact Tracking System

    Photo: Tobacco Reporter archive

    Pakistan’s Federal Board of Revenue (FBR) has signed agreements with 22 tobacco manufacturers to install a track-and-trace system at their factories, reports The News International.

    The digital system, which allows the FBR to monitor the production, distribution and sale of tobacco products through unique identification codes and stamps on cigarette packs, is expected to increase the tax revenue from the tobacco sector, which contributes about 1.5 percent of the total tax collection in Pakistan.

    The FBR initiated the system two years ago. Pakistan Tobacco Company (PTC) and Philip Morris International were the first to sign agreements and make the system operations, followed by Khyber Tobacco Co.

    Now the FBR has signed agreements with 18 more manufacturers.

    There are between 26 and 30 tobacco manufacturers in Pakistan, according to FBR estimates, though some of them are not operational or have moved to nominally self-governing territories such as Azad Jammu and Kasmir.

    The implementation of the track-and-trace system has been marred by legal challenges. With the exception of one case, all these challenges have been rejected in court.  

    FBR officials expect the system to become operational by October 2023.

  • Manufacturers Enact Tracking System

    Manufacturers Enact Tracking System

    Image: www.doglikehorse.com

    About 20 local cigarette manufacturing companies signed agreements with Pakistan’s Federal Board of Revenue (FBR) for implementation of a track-and-trace system, according to ProPakistani.

    The local companies have been forced to start implementation of the system due to vacation of stay orders from courts and the deputation of Inland Revenue officials. The FBR has been in a court battle for about two years over implementing the system; the FBR finally won the legal battle and is now enforcing the track-and-trace system at local factories.

    Implementation is at different stages for each company; almost all local manufacturers have signed the agreements with the FBR and begun implementing the track-and-trace system. One company has fully implemented the system while six companies are manually stamping cigarette packs. Some companies have purchased applicators, and other companies have started test runs.

    All manufacturing companies within the jurisdiction of Azad Kashmir have obtained stay orders against the system, however.

  • Pakistan: Cigarettes Seized for Tax Violations

    Pakistan: Cigarettes Seized for Tax Violations

    Photo: sezerozger

    Pakistan’s tax authorities confiscated 650 cartons of cigarettes from Philip Morris (Pakistan), alleging that the products were sold below the minimum retail price, reports Pakistan Today.

    “This action underscores the government’s commitment to upholding tax laws and safeguarding public health,” a Federal Bureau of Revenue official was quoted as saying. “Violations of these regulations not only undermine public health initiatives but also lead to revenue losses for the government.”

    Philip Morris insisted it was in full compliance with tax obligations for all its brand. A company spokesperson said that the company is cooperating with FBR and is dedicated to tackling illicit trade in Pakistan.

    leo.