Illicit tobacco trade

As a law-abiding, tax-paying citizen, I feel it is high time we started talking about the harmful implications of the illegal cigarette trade in Pakistan. It’s a matter of concern to know where these counterfeit cigarette brands come from and, even more importantly, who is benefiting from their distribution and sale.

There are illegally sourced or manufactured cigarettes in every corner shop that are kept hidden behind counters, and sold only to trusted acquaintances. I would like to know how or when it will be possible to eliminate these illegal threats to the wellbeing of our beloved nation’s economy

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Pakistan is among one of the largest consumers of tobacco in the world – at the end of 2020, around 28 million Pakistanis of 15 years and above were smokers. Millions of young people (the future of Pakistan) are being hooked on narcotics abuse through cigarettes, other hazardous products leading to deaths of thousands every year from tobacco related diseases – the majority of these from lung and other cancers, strokes, ischemic heart, other cardiovascular and respiratory diseases.

In the face of this reality, the merchants of death are present even in elected houses, shamelessly intimidating the FBR and other law-enforcement agencies of dire consequences if they are touched. This rampant illicit trade is not possible without political patronage and control of the law-enforcement agencies through money power.

The legitimate question is how twice the FBR awarded a contract for licence of a track and trace (T&T) system of tobacco products by not following the rules. The first one was in violation of the World Health Organisation’s Framework Convention on Tobacco Control (WHO FCTC) Protocol, which sets out a clear strategy for the implementation of comprehensive, industry-independent T&T systems for tobacco. The then chairman of the FBR claimed that the contract was awarded to the lowest bidder and as per rules. However, the Islamabad High Court declared it unlawful with the directions that “the FBR is at liberty to initiate a fresh bidding process strictly in accordance with the law”

The second one of Rs25 billion was suspended by the Sindh High Court on a writ petition on March 13, 2021. The court has issued notices to the FBR and the federal government, fixing the case hearing for April 5, 2021. The prime minister showed annoyance but did not fix responsibility for irregularities committed twice by the FBR. Is it lack of capacity or was it a deliberate act? Many eyebrows are raised. In both the cases, the concerned were not sacked, and no inquiry was conducted to unveil the forces behind it. It was alleged in the media that one official of the FBR was transferred from Peshawar to Quetta for raiding a factory producing counterfeit cigarettes. The factory owner accused the FBR of blackmailing him.

On September 25, 2020, there was a protest in Islamabad by civil society and lawyers joining hands with residents of Muzaffarabad and other parts of Azad Jammu & Kashmir (AJ&K) against production/sale of counterfeit cigarettes, with serious health implications and causing revenue loss of billions of rupees to the Department of Inland Revenue (AJ&K) and the FBR.

The solution is proper monitoring of Green Leaf Threshing units (GLTs) – the main link in supply chain of 75,000 plus farmers, 500,000 plus retailers and 45 plus manufacturers. Only 11 GLTs are supplying raw material to cigarette manufacturers. It is strange that the FBR with its huge workforce cannot monitor just a few GLTs as per chapter XVI of the Federal Excise Rules 2005.

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Pakistan signed the FCTC in May 2004 and ratified it in the same year. After a lapse of over 16 years, it has still failed to implement T&T to curb illicit cigarette trade. According to one estimate, Pakistan’s revenue loss from illicit cigarette trade has now increased to more than Rs80 billion per annum from Rs27 billion in 2012.

It is interesting to know how much money these criminals owe to the government and to the people of Pakistan. I’m sure if they are cracked down on strategically, the tobacco mafias around the country will have no choice but to either close operations or start working legally and paying taxes. It is fundamental that we work hard to create the world we want to live in, and it starts with the economy.

Ammar Muzaffar

Karachi

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