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Business Recorder
24-05-2025
- Business
- Business Recorder
Tobacco industry distraction?
As Pakistan grapples with economic instability and a looming revenue shortfall, the tobacco industry has once again deployed its playbook of deception to evade accountability and sabotage public health. The recent flurry of articles in the newspaper and social media appearances, regurgitating industry-funded 'studies' on illicit tobacco trade, is not a coincidence. It is a meticulously timed distraction, part of a decades-old strategy to paralyse policymakers into inaction on tobacco taxation, a measure proven to save lives and boost revenue. This year's budget cycle has exposed the tobacco industry's brazen manipulation of data, exploitation of regulatory loopholes, and blatant disregard for both Pakistani law and global health commitments under the WHO Framework Convention on Tobacco Control (FCTC). The narrative promoted by the tobacco industry is as predictable as it is disingenuous. Every year, ahead of budget discussions, front groups and affiliated media, and social media outlets amplify claims that unregistered local manufacturers dominate the market, evade taxes, and undermine 'legitimate' companies operating in Pakistan and other parts of the globe. These reports, often dressed as independent research, promote three key talking points: first, that multinational tobacco giants contribute up to 98 percent of tobacco taxes, positioning themselves as fiscal heroes; second, that their market share is shrinking due to illicit trade; and third, that taxing tobacco further would only exacerbate smuggling. But a closer examination reveals a web of contradictions, half-truths, and outright fabrications designed to serve one purpose: protecting profits at the expense of precious lives. Consider the glaring inconsistency in the Tobacco industry's data. While the industry claims reduced production in tobacco-growing regions, official figures from the Pakistan Tobacco Board show no significant drop in output. In 2023-24, nearly 60 million kilograms of tobacco was procured, sufficient to produce approximately 60 billion cigarette sticks. Yet, the tobacco industry insists its market share is declining, a contradiction that defies basic arithmetic. The reality is simpler: the industry has flooded the market with untaxed, non-compliant brands lacking graphic health warnings (GHW) or tax stamps, deliberately blurring the line between licit and illicit products. By introducing these shadow brands, multinational companies shift blame onto 'local unregistered manufacturers' while pocketing profits from the very market they decry as illicit. This duplicity is not just unethical, it violates FCTC Article 5.3, which obligates governments to insulate public health policies from commercial interests. The tobacco industry's manipulation extends to its financial reporting. Discrepancies in sales figures submitted to the statistics monitoring bodies, such as the Pakistan Bureau of Statistics, the Federal Board of Revenue (FBR), and Pakistan Stock Exchange, expose a deliberate strategy to confuse regulators and underpay taxes. For instance, while the tobacco industry reports declining sales to justify opposition to tax hikes, its stock exchange filings and procurement data tell a different story, one of stable or growing operations. Such tactics are not unique to Pakistan. In low- and middle-income countries (LMICs) worldwide, the tobacco industry exploits weak governance and regulatory gaps to undermine taxation, a core FCTC demand. By framing itself as a victim of illicit trade, the industry distracts from its role in perpetuating the crisis. Equally, alarming is the tobacco industry's capture of media and policymaking channels. Despite a ban on tobacco advertising, front groups and pseudo-research organizations routinely place half-page ads and op-eds in leading newspapers during budget season. These ads, masquerading as public service messages, repeat industry talking points unchallenged, normalizing the tobacco industry's influence in public discourse. A recent more violent example is the government's controversial approval for manufacturing 10-pack cigarettes for export to war-torn Sudan, a move that blatantly violates FCTC guidelines on tobacco manufacturing and exports, solely because these low priced-packs are easily affordable for children and youth, especially in the war zones where regulatory oversight is minimal, and exploitation risks are high. This decision, ostensibly framed as 'economic diplomacy,' reveals the tobacco industry's ability to bend policy even in areas with clear humanitarian and ethical red flags. The consequences of this interference are dire. Pakistan loses over PKR 700 billion annually to tobacco-related illnesses, while the tobacco industry contributes less than half of this in taxes, a fraction of the societal cost. By blocking tax increases, the tobacco industry ensures cigarettes remain affordable, fuelling addiction among youth and low-income populations. Meanwhile, the Tobacco industry's exaggerated claims about illicit trade, inflated by its own illicit practices, are weaponized to stall meaningful reforms. This cycle of deception is not unique to Pakistan; it mirrors tactics used in LMICs around the globe, where the tobacco industry preys on fragile institutions to entrench its market power. The solution lies in rejecting the tobacco industry's false binaries. Illicit trade is not an excuse to spare multinational corporations from taxation; it is a problem exacerbated by the industry itself and is purely an administrative issue. Strengthening tax enforcement, simplifying tax structures, and investing in track-and-trace systems would curb smuggling far more effectively than capitulating to the tobacco industry's demands. Moreover, LMICs must rigorously enforce FCTC Article 5.3 by mandating transparency in all government-tobacco industry interactions, banning corporate social responsibility (CSR) initiatives by tobacco companies, and penalizing media outlets that platform industry propaganda. The upcoming budget is a litmus test for Pakistan's commitment to public health. With the national exchequer facing a revenue crisis, the government must recognize that the tobacco industry is not a partner but a predator. Heavy taxation of tobacco, aligned with WHO recommendations, could significantly reduce healthcare burden and generate billions in additional revenue. The tobacco industry's scare tactics about illicit trade must be met with facts, not fear. After all, an industry that manipulates data, evades taxes, and markets death to children has no moral standing to responsible fiscal policy. The stakes could not be higher. Every year, over 8 million die globally from tobacco-related diseases, 160,000 from Pakistan alone. Every delay in reform empowers the tobacco industry to addict a new generation. This budget season, policymakers must choose: Will they side with public health or corporate profit? The answer will impact future generations and their resolve to break free from the tobacco industry's deadly trap. Waseem Iftikhar Janjua / Syed Ali Wasif Naqvi (The writers are tobacco control advocates and work at the Sustainable Development Policy Institute (SDPI), Islamabad, Pakistan. The views expressed by these writers are not necessarily those of the newspaper) Copyright Business Recorder, 2025
Business Recorder
21-05-2025
- Business
- Business Recorder
Tobacco exporters meet Jam Kamal
ISLAMABAD: A delegation of leading tobacco exporters met with Federal Minister for Commerce Jam Kamal Khan on Monday to discuss ways to enhance Pakistan's tobacco exports and address challenges related to tariffs and regulatory frameworks. During the meeting, exporters appreciated the government's ongoing efforts to promote trade and highlighted the significant contribution of the tobacco industry to employment, rural development, and export earnings. They shared that with targeted facilitation, tobacco exports have the potential to increase substantially, supporting national revenue goals. Exporters pointed out that the current tax structure, which includes a Federal Excise Duty (FED) of Rs390 per kg, Provincial Excise Duty (PED) of Rs50 per kg, Federal Tobacco Cess of Rs15.15 per kg, and a Provincial Development Cess of Rs25 per kg totals Rs480.15 per kg. They said this cost poses a challenge particularly for smaller exporters and suggested that a more competitive taxation model would help enhance Pakistan's position in the global tobacco market. The exporters emphasized that tobacco, like other agricultural commodities such as sugarcane, cotton, and citrus, should be supported through market-based policies. They noted that annual price adjustments are mandatory under current regulations, which can affect competitiveness in export destinations. Minister Jam Kamal Khan acknowledged the concerns raised and reiterated the government's commitment to balanced and growth-oriented policies. He remarked that optimal revenue generation comes not only from taxation but also from encouraging industry expansion and boosting exports. He noted that similar concerns have also been raised by other sectors, such as beverages, regarding the impact of high taxation on consumer demand and revenue collection. The exporters also called for the revival of the Pakistan Tobacco Board (PTB) to support coordinated efforts in export promotion and policy facilitation. In response, the Minister proposed the establishment of a Sectoral Council for Tobacco, similar to other existing sectoral councils, to provide a structured platform for industry dialogue and representation. Copyright Business Recorder, 2025
Business Recorder
20-05-2025
- Business
- Business Recorder
Pakistan's tobacco exporters urge competitive tax model, cite challenges for smaller firms
Pakistan tobacco exporters have warned that the current tax structure 'poses a challenge', especially for smaller players, and urged the government to adopt a more competitive taxation model. A delegation of leading tobacco exporters raised these concerns during a meeting with Federal Minister for Commerce Jam Kamal Khan on Monday, read a statement released by the commerce ministry on Tuesday. During the meeting, exporters pointed out that the current tax structure—which includes a Federal Excise Duty (FED) of Rs390 per kg, Provincial Excise Duty (PED) of Rs50 per kg, Federal Tobacco Cess of Rs15.15 per kg, and a Provincial Development Cess of Rs25 per kg—totals Rs480.15 per kg. 'They said this cost poses a challenge, particularly for smaller exporters and suggested that a more competitive taxation model would help enhance Pakistan's position in the global tobacco market,' read the statement. The exporters emphasised that tobacco, like other agricultural commodities such as sugarcane, cotton, and citrus, should be supported through market-based policies. They noted that annual price adjustments are mandatory under current regulations, which can affect competitiveness in export destinations. Kamal acknowledged the concerns and reiterated the government's commitment to balanced and growth-oriented policies. He remarked that optimal revenue generation comes not only from taxation but also from industrial expansion and boosting exports. Tobacco revenue can increase by bringing illicit trade into tax net Kamal noted that similar concerns have been raised by other sectors, such as beverages, regarding the impact of high taxation on consumer demand and revenue collection. The tobacco exporters also called for the revival of the Pakistan Tobacco Board (PTB) to support coordinated efforts in export promotion and policy facilitation. In response, Kamal proposed the establishment of a Sectoral Council for Tobacco, similar to other existing sectoral councils, to provide a structured platform for industry dialogue and representation. The minister further informed the delegation that a revenue policy committee has been made independent of the revenue collection mechanism—an important step toward more informed and consultative policymaking. Meanwhile, exporters appreciated the government's ongoing efforts to promote trade and highlighted the significant contribution of the tobacco industry to employment, rural development, and export earnings. They shared that with targeted facilitation, tobacco exports have the potential to increase substantially, supporting national revenue goals. Exporters appreciated Kamal and expressed confidence that with continued government support, the industry could significantly increase its export footprint, read the statement. Pakistan's tobacco exports reached $158.35 million in the current fiscal year (July–April), with promising growth in markets such as Belgium, UAE, Greece, and the Philippines.
Express Tribune
04-02-2025
- Business
- Express Tribune
PTB dissolution may hurt tobacco industry
Listen to article LAHORE: The federal government's decision to dissolve the Pakistan Tobacco Board (PTB) and hand over the regulatory authority to provincial governments has sparked controversy, which may have severe economic, social and regulatory consequences. "The PTB has played a pivotal role in regulating tobacco production and the industry under a centralised system that benefits all stakeholders, including farmers and the legal tobacco sector," remarked Osama Siddiqui, a macroeconomic expert. He added that the dismantling of the system could lead to a surge in illegal tobacco cultivation and sales, which would undermine the legal industry. One of the PTB's critical contributions has been ensuring fair prices for tobacco farmers, especially in Khyber-Pakhtunkhwa (K-P), where the majority of Pakistan's tobacco is produced. By maintaining a balance between supply and demand, the PTB has safeguarded farmers' interests, providing them with a stable income. The expert fears that provincial governments lack the capacity to manage this responsibility effectively. Without the PTB's oversight, the farmers could face financial hardships due to falling prices and market instability. A decline in tobacco production will deprive the farmers of their livelihoods and leave them vulnerable to exploitation. The PTB's centralised regulation has also fueled growth in tobacco exports, which increased from $42 million in 2019-20 to $108 million by the end of 2024. Additionally, legal tobacco sales have made a substantial contribution to the national treasury by generating Rs237 billion in revenue in FY25 through the federal excise duty and sales tax.
