According to a case study published by STOP (an international tobacco industry watchdog organization) the tobacco industry in Pakistan is undermining the industry’s trace and track system by oversupplying markets, knowing that the excess product would illegally spill into other markets.
Therefore, the importance of implementing an independent, fair, and effective tracking and tracing system is necessary to proactively manage issues of taxation, pricing, and illicit trafficking of tobacco products in the country.
Given the fact that Pakistan is a Party to the Illicit Trade Protocol which requires all parties (countries) to implement their own cigarette tracking and tracing system with the requirement that it “shall not be performed by or delegated to the tobacco industry,” it is an opportunity for the country to take heed to the recent ruling of the Islamabad High Court regarding the voiding of the current trace and track system, and control the supply-chain process in the bargain.
As reported in the national media on 8 May 2020, on petitions filed by two companies, the Islamabad High Court (IHC) recently scrapped the flawed multi-million dollar license awarded to the National Radio & Telecommunication Corporation (NRTC) for installing a track and trace system within the tobacco industry; the court has directed the Federal Board of Revenue (FBR) to initiate fresh bidding.
The STOP watch-dog study also indicates, tobacco companies have an extensive history of complicity in tobacco smuggling, having used it as a method to avoid paying tax on products that they export. Often, they would do this by oversupplying markets, knowing that the excess product would illegally spill into other markets.
Growing evidence from industry observers indicates that tobacco companies are continuing to facilitate the black market in this way, so an independent, fair, and effective tracking and tracing system is necessary to control and curtail this behavior.