MARDAN: Anjuman-e-Keshtkaran, Khyber Pakhtunkhwa, president Ajmal Shah Roghani on Tuesday said that smuggling and trade of illegal cigarettes were inflicting huge financial losses on the legal tobacco companies, the national economy, and also affecting the tobacco farmers.
“The seizure of 11 trucks loaded with illegal cigarettes near Chakri, Rawalpindi, has raised new questions about the organised tax evasion network in the country and the ineffective monitoring system of the Federal Board of Revenue (FBR),” he said while talking to The News.
The farmers’ leader said that illegal cigarette manufacturers always evaded federal excise duty (FED) and sales tax and did not fulfil other legal requirements. He argued that about 40 to 50 percent of the tobacco market in Pakistan consisted of illegal, tax-evaded and smuggled cigarettes, due to which the national exchequer was facing a tax loss of over Rs300 billion annually.
According to statistics, registered and multinational companies manufacturing legal cigarettes have only 50 to 60 percent of the market share, but pay about 98 percent of the total tax. In contrast, illegal factories and smugglers paid only 3 to 4 percent tax despite occupying 40 to 50 percent of the market.
The experts and industry circles said that although this operation was a major success, it has also exposed the shortcomings in the monitoring and enforcement system. According to sources, the track and trace system, surveillance under Section 40-B, CCTV cameras and strict monitoring measures at various check posts were already in place in the tobacco industry.
Despite this, 11 trucks loaded with illegal cigarettes left the relevant factories and passed through various highways and checkposts before reaching Chakri, raising questions about the ineffectiveness of the current surveillance system.
The experts said the incident highlights weaknesses in supply chain monitoring, inter-agency coordination and intelligence sharing, which are being exploited by elements involved in illegal business to undermine the national tax system. Unfair competition severely affects companies that regularly pay all taxes and legal obligations.
Mohammad Khan, a tobacco grower, said that the sale of illegal cigarettes not only affected the legal tobacco industry but also tobacco farmers. He argued that the decline in demand from the legal industry affected farmers’ income, reduced investment, slowed down industrial growth and limited employment opportunities. He said that along with this, the national exchequer also lost billions of rupees in revenue every year.
According to him, raids and seizure operations alone were not a permanent solution to the problem.The experts have urged the FBR to make intelligence-based operations more effective, ensure better communication and exchange of information between relevant agencies, while immediately addressing the shortcomings in the supply chain.
