Daily Times

ISLAMABAD: The country suffers an annual loss of over Rs 20 billion owing of illegal tobacco trade as international smugglers have allegedly forge a nexus with Federal Board of Revenue (FBR) to target local cigarette manufacture companies through a fake report.

According to local cigarette companies, smuggled cigarettes are available in the market despite the presence of the intelligence directorates general of the Customs Department and the Federal Board of Revenue (FBR).

“If FBR effectively checks non-duty paid items, smuggled items would not be available in the federal capital,” the companies said, adding that the main reason for the failure to control cigarette smuggling was lack of efforts by the agencies.

They claimed that only superficial actions were being taken by the FBR and the authorities were not conducting raids at wholesale markets.

The report by a US-based research agency, Nielsen, said that two tobacco manufacturers contribute 99.3 percent of the revenue generated from the industry. It claimed that legitimate companies are subjected to taxation and duties but there is no defined system of check and balance against the “illicit” cigarette network across the country.

There is a need to execute a comprehensive and holistic strategy to tackle cigarette smuggling. Multiple laws already exist and, if enforced rigorously, can bring down the incidence of the illicit segment and help the government in raising more revenue.

The industry players attributed the increase in smuggling to the high federal excise duty that had raised the prices — the average price of a lower category duty-paid pack of cigarettes has increased from Rs 38 to Rs 65.