Tag: Pakistan

  • Lower taxes, more revenue

    Lower taxes, more revenue

    Pakistan’s government says that a cigarette federal excise duty (FED) reduction is aimed at convincing smokers currently buying black-market products to switch to duty-paid products.

    It says that currently it is losing millions of rupees in revenue to the widespread availability of smuggled cigarettes.

    But not everyone is convinced. Writing in The News, Syed Anwer Alam said the introduction of a third-tier federal excise duty on cigarettes, which would result in a 50 percent reduction in tax on tobacco products – was likely to increase their consumption in the country.

    Quoting ‘a report’, Anwer Alam said Pakistanis smoked more than 65 billion cigarettes annually, and that more than 100, 000 deaths in the country could be attributed to diseases caused by smoking.

    Pakistan was a signatory to the World Health Organization’s Framework Convention on Tobacco Control (FCTC), which called for ‘price and tax measures to reduce the demand for tobacco’.

    The minimum FED suggested under the convention was 75 percent.

    According to Anwer Alam, a ‘report released by a non-profit organization suggests that the cumulative FED on tobacco products till FY 2016-17 was around 57 percent.’

  • Warnings on hold

    Health warnings photo
    Photo by Mikael Colville-Andersen

    Pakistan’s Coalition for Tobacco Control is calling on the government to enforce regulations requiring cigarette packs to carry graphic health warnings taking up 85 percent of both the front and back panels, according to a story in the Pakistan Observer.

    The regulations appear to be two years old.

    The national co-ordinator of the coalition, Khurram Hashmi, said on Sunday that the Ministry of National Health Services, Regulation and Co-ordination (NHSRC), had demonstrated exemplary leadership by introducing in January 2015 graphic warnings increased from 40 percent to 85 percent on the front and back of cigarette packs.

    He said this government initiative had set an example within the Asia region and demonstrated that Pakistan was one of the few countries that prioritized the health of its citizens over corporate interests.

    After the government’s announcement, India had been encouraged to enforce a similar policy of enhanced graphic warnings on cigarette packs, he said, and, as of June 2016, those warnings had started to appear on cigarette packs in India.

    However, Hashmi said, despite government efforts, there had been a delay in the implementation of the enhanced graphic warnings in Pakistan that had resulted in a major set-back for tobacco control efforts by the government.

    Meanwhile, Dr. Sobia Faisal, a public health expert, said that Pakistan had about 19.1 million tobacco users, made up of 31.8 percent of the country’s men and 5.8 percent of its women.

    Tobacco she said harmed people’s health, the treasury, and the spirit of citizens. The tobacco epidemic in Pakistan required urgent attention.

    Faisal said that tobacco companies used packaging as their major marketing tool to make tobacco appear appealing, while distracting consumers from the reality of how tobacco destroyed health.

    Graphic warnings were a low-cost method of warning tobacco users and non-users about the harms of tobacco, and they were effective in motivating smokers to quit.

  • 2013 Pakistan Tobacco profits 202 percent higher than 2012

    The Pakistan Tobacco Company has announced its results for the quarter ended March 31, 2013, recording stellar earnings of Rs1.09 billion as compared to only Rs359 million earned in the same period of the preceding year (translating into 202 percent growth). The company has also announced an interim dividend of Rs2 per share alongside the results, according to a story in the The International Herald Tribune.

    The company’s net sales for the period improved nearly 28 percent over the same period of the previous year, and it recorded a 45 percent higher gross profit at Rs2.72 billion. Meanwhile, its selling and distribution expenses dropped 33 percent over the previous year to Rs597.49 million, while administrative expenses remained more or less flattish at Rs331.72 million. At the same time, its operating expenses grew 17 percent to Rs136.53 million, while operating income also registered a rise of 144 percent to Rs20.99 million. All these factors meant the company retained more of its gross profits than the previous year, as its net finance costs also registered a drop of an impressive 96 percent to Rs1.66 million.

    The company paid a total of Rs15.26 billion in excise, sales and income taxes for the period.

  • Pakistan has $175.8 million reasons to tackle tobacco smuggling

    Pakistan is losing 17 billion Pakistani rupees ($175.8 million) per annum due to the illicit cigarette trade, which represents about 26.7 percent of total cigarettes consumed in terms of volume.

    According to a research paper compiled by the Euromonitor International, and cited in a story published by the Asia News Network, Pakistan ranked third-highest in illicit trade in Asia-Pacific countries, behind Malaysia and Hong Kong last year.

    When compared to its Asia-Pacific counterparts, over a five year period (2006-11), Pakistan’s illicit cigarette trade registered the second-highest growth of 62.77 percent after Vietnam (70.7 percent).

    During the same period China, the largest cigarette consuming economy in Asia Pacific, registered an impressive contraction in illicit trade by 18 percent.

    Total government revenue loss over the past five years due to illicit trade amounted to a staggering 80 billion rupees. This is approximately equivalent to 11 percent of the funds approved by the Public Sector Development Programme.

    The document further revealed that Pakistan’s illicit cigarette trade comprises three main types, namely, local duty-not-paid (DNP), smuggled and counterfeit. Of these, local DNP cigarettes have the dominant share unlike the global norm where smuggled cigarettes are usually the real cause of concern.

    The local DNP cigarettes made up to 84.5 percent of total illicit market, while 12 percent and 3.5 percent were smuggled and counterfeit cigarettes, respectively. This high share of local DNP suggests that situation is more of an internal problem, thus highlighting the need for improving local law enforcement.

    Euromonitor estimates that an alarming 26.7 percent of all cigarettes consumed in Pakistan last year were illicit comprising local DNP, smuggled or counterfeit. This translates to a massive volume of 23.5 billion sticks. It further stated that during 2002-2011, global illicit cigarette trade contracted by 7.3 percent, whereas in the same period, the situation in Pakistan worsened with a growth in illicit trade of 113.6 percent. In fact, volume of illicit cigarettes more than doubled from 11 billion sticks in 2002 to 23.5 billion sticks in 2011.