Zubair Yaqoob
Karachi
Pakistan, along with the world, is fighting against Coronavirus. Many corporate giants and others are helping the Prime Minister (PM) to generate funds to fight the pandemic. PM Imran Khan will require lots of funds that would enable him to take the required measures in current scenario – but if the government works on curbing illegal trade within the country, it is expected that a large sum of money can be generated which will help the PM in the fight against COVID-19.
As an example, if we look at the responsibilities of the Ministries that they have not being fulfilling, we see the Ministry of National Health Services Regulations and Coordination is ignoring the sale of illegal cigarettes across the country.
According to the laws of the Health Ministry, a pack of cigarettes being sold in Pakistan should bear the Graphical Health Warning (GHW), should not be sold below the prices set by the Ministry and should not be advertised in any manner. Despite of the laws being present, the Health Ministry is unable to implement and enforce these laws on ground, as the illegal manufacturers are operating freely and selling undocumented cigarettes on discounted prices while continuing to advertise locally.
Surprisingly, the major chunk of these illegal cigarettes are not being smuggled into the country, but are from the home-grown illegal trade. Now if we talk about the taxes being imposed on the tobacco industry, we hear that many organizations have suggested the imposition of Rs10 Health Tax on tobacco products and Rs1 on carbonated drinks. But they might not be aware of the fact that the aforementioned illegal trade is causing a loss of Rs44 billion annually, just from the illegal trade of tobacco.
If the Health Ministry focuses on implementing its own laws, they might be able to generate a lot more funds, while with the help of FBR, the illegal trade in the country can be restricted and the consumption of cigarettes will also drop. In the Budget Speech 2019-20, the then Revenue Minister clarified that additional health tax cannot be imposed on cigarettes and beverage industry and any additional funds required by the Health Ministry will be allocated to them as per the federal pool, which clarifies that there is no need to impose more taxes in the name of Health. Increasing taxes on the manufacturers that are already paying high taxes and facing issues due to the illegal trade in the country will only increase the prices of their products while the illegal manufacturers will continue to sell at the same cheap price.
