Illegal cigarette trade costs kitty Rs10.5 billion

Tax evasion by cigarette industry along with cigarette counterfeiting and smuggling has cost the national kitty Rs10.5 billion over the last nine months as compared to Rs9.5 billion in the corresponding period in 2010, according to tobacco industry statistics.

Of the Rs10.5 billion revenue losses, Rs7 billion is caused by tax evasion, Rs1 billion by counterfeiting and Rs2.5 billion by smuggling.

Most counterfeit cigarette manufacturing units are located in Chakwal, Sargodha and Okara in the Punjab, and parts of Khyber Pakhtunkhwa and Azad Jammu and Kashmir. And their number is around 25.

According to the statistics, 2008 reported Rs 6 billion revenue losses from tax evasion, counterfeiting and smuggling by cigarette makers and traders. In 2011 until now, 31 billion cigarette sticks were manufactured.

During the fiscal 2010-11, the cigarette industry s contribution to national exchequer totalled Rs58.5 billion, while it was Rs55.9 billion in the previous year. The national cigarette market s size is around 72 billion sticks of which 59 billion are supplied by over 50 licensed manufacturers, while the remaining are either counterfeit, non-duty paid or smuggled ones. As claimed by the tobacco industry, unregistered cigarette manufacturing units force farmers to grow substandard tobacco, which is used to produce substandard and counterfeit cigarettes, for better profit at the expense of people s health.