AGL40.04▲ 0.04 (0.00%)AIRLINK129.1▼ -0.43 (0.00%)BOP6.73▲ 0.05 (0.01%)CNERGY4.48▼ -0.15 (-0.03%)DCL8.55▼ -0.39 (-0.04%)DFML40.85▼ -0.84 (-0.02%)DGKC81▼ -2.77 (-0.03%)FCCL32.8▲ 0.03 (0.00%)FFBL74.5▼ -0.97 (-0.01%)FFL11.77▲ 0.3 (0.03%)HUBC109.25▼ -1.3 (-0.01%)HUMNL13.8▼ -0.76 (-0.05%)KEL5.35▼ -0.04 (-0.01%)KOSM7.67▼ -0.73 (-0.09%)MLCF38.75▼ -1.04 (-0.03%)NBP63.75▲ 3.46 (0.06%)OGDC195.5▼ -4.16 (-0.02%)PAEL25.79▼ -0.86 (-0.03%)PIBTL7.42▼ -0.24 (-0.03%)PPL155.77▼ -2.15 (-0.01%)PRL25.84▼ -0.89 (-0.03%)PTC17.44▼ -1.02 (-0.06%)SEARL78.8▼ -3.64 (-0.04%)TELE7.84▼ -0.47 (-0.06%)TOMCL33.99▼ -0.52 (-0.02%)TPLP8.54▼ -0.52 (-0.06%)TREET16.22▼ -1.25 (-0.07%)TRG58.22▼ -3.1 (-0.05%)UNITY27.5▲ 0.07 (0.00%)WTL1.39▲ 0.01 (0.01%)

Economy’s pain points tightening noose around tax-compliant cigarette industry

Share
Tweet
WhatsApp
Share on Linkedin
[tta_listen_btn]

 

ISLAMABAD – Ipsos Pakistan launched its research study, ‘Pakistan Cigarette Market Assessment 2024’ in Islamabad. The report represented a comprehensive survey of over 1,000 retail outlets across all four provinces of Pakistan, thoroughly covering both urban and rural areas.

Key findings highlight a significant shift in market dynamics, including a projected decline in the market share of legitimate cigarette brands and an increase in illicit brands. This has severe implications for legitimate businesses’ national revenue and sustainability.

The easy availability of low-priced smuggled and tax-non-paid cigarettes all across Pakistan, non-compliance with the Track & Trace system, cigarette sales below the minimum legal price (MLP), price disparities, and numerous other crises not only put the compliant cigarette industry to its knees, but it also dented the national exchequer with an annual loss of Rs300b.

While visiting retail outlets in these areas, Ipsos checked the availability and prices of tax-non-paid and smuggled cigarette brands. They estimated the market shares, compliance of Track & Trace (T&T) and minimum legal price (MLP), price disparities and new phenomena in the market. Later, Ipsos also presented an analysis of the information collected from the markets of these areas. Furthermore, after increased enforcement, an observation study was conducted across the sample to corroborate the findings.

“Year on year, 6 brands have been included in the Track and Trace list; however, there have been numerous instances where the same brands were being sold without stamps. The failure to implement Track and Trace is evident as 37 news brands, bringing the total to 165 brands, in the market do not have track and trace stamps.”

The research exposed another failure of the concerned authorities. It mentioned that in Pakistan, around 104 cigarette brands were being sold below the MLP. In comparison, 45 smuggled brands were being sold above the MLP. “53% of the cigarette brands available in the market are being sold below the MLP,” the study added.

To show a colossal margin of disparities in the market, the research highlighted that a locally manufactured tax-evaded pack of a famous brand was being sold for Rs 120. In contrast, another pack of a famous smuggled brand was priced at Rs 165. Both brands were readily available across the surveyed areas. Contrary to that, the most popular tax-paid brands were sold for Rs 220 and 550. Nearly 95% of the cigarette market lies between Rs. 65 – Rs. 220 price bracket per pack.

The research said that in the surveyed areas, most of the locally manufactured tax-evaded brands were also available in packs of 25 and 30 cigarettes. This availability not only encouraged retailers to sell single-stick cigarettes but also provided them with additional financial benefits in the form of discounts.

The study presented the overall market projections, saying illicit manufacturers and smugglers would continue to capture the market. At the same time, duty-paid brands would keep taking regular hits.

While analyzing the overall situation, the study said that the consumers were constantly shifting from duty-paid to locally manufactured tax-evaded and smuggled cigarette brands, which is why the overall illicit share, which was recorded at 48% in last year’s Ipsos syndicated research, this year expected to reach.

While concluding the scenario, the study said, “Cigarette companies in Pakistan are selling 79-81b sticks annually. This means that approximately 2.5b cigarette packs are evading tax net. This tax evasion is causing the national exchequer to lose Rs 300b annually.”

Related Posts

Get Alerts