If a government gives someone a task to control the illicit trade of something in the country, the first thing the person or an entity will do is to closely study the particular industry and look out for the bottlenecks to focus on.

For instance, if something is traded in the country after entering from Afghanistan then checkpoints need to be put in place to all routes, or the ones that will most probably be used to bring smuggled items to Pakistan.

Among several industries, Tobacco Industry is the one the government should look to tame since as much as 40% of it has gone rogue – as the significant illicit portion of the industry uses political muscles to remain undocumented and evade taxes. The exchequer loses revenues of around Rs44 billion every year due to illicitly traded cigarettes in the country. But there’s an easy way out to bring the illicit trade into government loop if relevant government departments just stop passing the bucks.

 The industry’s bottleneck is Green Leaf Thrashers (GLTs). All locally harvested tobacco leaves have to go through GLTs to eventually end up being used in cigarette manufacturing.

There are only 10 GLTs in the country. And if anyone in the country wants to manufacture cigarettes to trade it then they have to bring their tobacco here to prepare them by having tobacco industrially thrashed so that the thrashed tobacco could be used in cigarettes.

The only thing the government has to do is to 24/7 monitor these limited GLT facilities and keep records of entities having their tobacco thrashed here. This activity can alone help the government increases its revenues by Rs44 billion, according to estimates.

Apparently the only thing that is stopping the relevant government agencies from taking action against the illicit trade of cigarettes is that that the undocumented portion of the industry has been patronized or more specifically profited and headed by the people in power – who happens to be in the incumbent government.

The government has fixed the minimum price of a cigarette pack at Rs63 however, these illicit cigarette manufacturers capitalize on this government’s maneuver for reducing cigarette consumption in their favor.

Since they don’t pay any tax, they are selling cigarette packs for a price as low as Rs25. This helps them to increase their market share for selling low price cigarettes. These low quality cigarettes are also affordable to youngsters, who otherwise may not afford to smoke.

So all efforts by the lawmakers to reduce menace of smoking among the general public by raising taxes will never be achieved. In fact it will further give competitive advantage to manufacturers and traders of illicit cigarettes as margin will further be increased as compared to legal players.

A simple survey in the country will reveal that there are several unknown brands of cigarettes being sold in the country. Moreover, manufacturers of illicit cigarettes are making the most of the government’s blind eyes as they are also manufacturing and selling counterfeit cigarettes with the name of well-known brands of legal players.

These cigarettes are sold at the same price as that of the legal brand–giving the illicit manufacturers abnormal profit margin since their cost of manufacturing is lower than the legal players as they don’t follow benchmark standards and the price they charge includes profit margin of the legal players as well as the tax collected by the government.

To make it simpler to understand, let’s assume that a legal player’s certain brand cigarette pack sells for Rs200. Cost of manufacturing and marketing expenses are Rs120 and Rs40 goes in taxes and remaining Rs40 is the profit margin of the company.

Now when the illicit cigarette manufacturers sell counterfeit cigarettes using the name of that brand then their cost of production is lower since they are not maintaining quality standards. Marketing expenses will be nil. Let’s assume their cost of production is Rs60 then the remaining Rs140 from the Rs200 is their profit.

That’s just one place where the government can increase its revenues with little effort by Rs44 billion. And it should look into this and stop the rich becoming richer especially by unfair means and illicitly notwithstanding whether they hold important positions in the govt.

The author is a business journalist, formerly associated with Express Tribune and Profit Magazine, with a keen interest in sports. He is working on his M.Phil thesis (Economics) at Karachi University.