LAHORE                 -            Tobacco use is taking more than seven million lives worldwide in a year, a fact acknowledged both by healthcare providers and those relating to manufacturing, marketing and sale of highly injurious to health products. Healthcare providers continue demanding the government a complete ban on manufacturing and sale of such injurious to health material. The companies acknowledge health hazards of tobacco and support the idea of saving youth from cigarettes while claiming they do not target potential smokers and work only for catering the need of existing ones. For manufacturers, tax-paying companies were not responsible for increasing use of tobacco as price of cigarettes was high and thus out of reach of students getting limited pocket money. In contrast, they claim, smuggled cigarettes and unregistered brands are easily available at cheap rates everywhere in the country in general and in remote areas in particular. This practice is not only playing with health of people but also depriving national kitty of billions of rupees revenue. They say that illegal manufacturing of cigarettes, especially in Khyber Pakhtunkhwa under the patronage of influential political families, and sale across the country is bigger challenge than controlling the menace of smuggling. This illegal manufacturing is making it difficult for taxpaying companies to continue business.

But this is what they are saying on record. In reality, they regularly lobby with respective governments to get the taxes on tobacco products reduced on different grounds and mostly succeed in their endeavours. Their argument is that the high taxation on tobacco products makes them expensive, so smokers are tempted to buy smuggled, counterfeit and non-custom paid cigarettes that are comparatively cheap. But the troubling fact is that the low prices due to low taxes encourage the youth and those on low incomes to start smoking. Those already smoking can buy more cigarettes than before and hence increase their consumption.

These companies also try to convince their respective governments that due to this illicit trade they are deprived of huge revenues they would have earned from formal trade. Quite understandably, governments are a bit confused. On the one hand, they do not want to lose huge revenue coming from the cigarettes industry, and on the other they have to fulfil their international obligations regarding tobacco control.

Leading cigarette manufacturing companies, especially the Pakistan Tobacco Company (PTC) and Philip Morris International (PMI), keep on asserting that high duties lead to tax evasion by small local manufacturers and illicit tobacco trade in the country. Their efforts and lobbying increase near annual budget due to the fear of imposition of higher taxes in compliance with the provisions of the World Health Organisation’s (WHO’s) Framework Convention on Tobacco Control (FCTC). They call for keeping these taxes low and focussing smuggling and illicit trade for making products of taxpaying companies compatible in the market. Usually this argument is bought readily by the Federal Board of Revenue (FBR) which is responsible for curbing smuggling, production of counterfeit cigarettes and evasion of taxes. This act on the part of the FBR is like accepting failure in checking illicit trade, and looking at someone other than itself to find out a solution.

For FBR, there is need to explore that how much cut in taxes has helped increasing revenues without affecting volume of cigarettes consumption. It has never happened. Third tier of taxation introduced by the FBR to give tax relief to cigarette companies caused the exchequer loss of billions of rupees and led to increased tobacco consumption in the country. The least the government can do is to withdraw this concession and at the same time focus measures to stop illegal sale.

Weak governance, high levels of corruption, poor government commitment to tackling illicit tobacco, ineffective customs and tax administration, and informal distribution channels for tobacco products – are the main reasons for revenue shortfalls in this sector. So, the best ways to maintain or increase revenue collection levels are to improve governance, make the tax collection machinery efficient and effective and end corruption. Reduction in tobacco taxes on the pressure of the cigarette industry has turned out to be counter-productive – especially in Pakistan, where revenues have decreased after the grant of tax concessions to the cigarettes industry.

There is an ever-increasing realisation among healthcare providers in general and anti-tobacco campaigners in particular that the pretext of the illegal trade is largely a lobbying tool used by the tobacco industry to get favourable taxation policies.

Anti tobacco campaigners also accuse cigarette companies of sharing fabricated and exaggerated figures about regarding illicit cigarette trade. These figures are obtained during research exercises by organizations sponsored by the tobacco industry. Even now the cigarette company PMI is sponsoring ads in the media against illegal trade and smuggling in different commodities, especially cigarettes. These ads refer to data provided on a PMI sponsored website.

The ‘Study to Assess the Volume of Illicit Cigarette Brands in Pakistan’ carried out by the Pakistan National Heart Association (PANAH) and the Human Development Foundation (HDF) challenges the claim of more than 40 percent cigarette sales being spurious. It puts this number to be not more than nine percent and claims to have done extensive studies and surveys to reach this conclusion. Researchers and surveyors even collected used packs and wrappers during this exercise. Healthcare providers and anti tobacco campaigners urge people at helm of affairs not to succumb to pressure of tobacco companies and increase duties for taking cigarettes out of reach of potential smokers. They also suggested improving governance and capacity of departments dealing with the menace of smuggling and sale of counterfeit and unregistered brands in the country, especially in remote areas.

– The writer is a staffer

at The Nation