Tobacco MNCs are crying wolf against illicit trade of tobacco in the country, and successfully convincing the government of being the only taxpayer’s company vs. all the local manufacturers. The so-called legal tobacco companies are not just causing financial losses to the national exchequer in the form of foreign exchange but also providing socio-economic family data to their affiliates without the knowledge of our government.
In 2017 one company exported almost 7 Million kilograms Tobacco Leaf to its affiliates @ 2.47 US dollars. Whereas, the worth of this tobacco in the international market is around $ 3.5 to $ 5.0. They are depriving the nation of roughly 12 Million dollars of foreign exchange. On the other side, about 630 Million rupees in taxation is avoided by lowering profitability. The MNC is exporting leaf at much lower rates to its affiliates in Europe, Africa and Asia, which causes enormous financial losses to the national exchequer in the form of foreign exchange and taxation together.
Also, the MNCs collects Tobacco Growers’ social, economic, and family data, for tobacco agreements, which are far beyond the business requirements. This data is transmitted to servers installed outside Pakistan, mainly in the Far East (Hong Kong, Jakarta, Philippine), Switzerland and the UK.
Point of national concern is our citizen’s data is available to the world without the approval of the government and consent of the growers & smoker.
And what about the illicit trade of tobacco by big tobacco in the country? Let’s start with how are they helping counterfeit? The big tobacco is unable to protect their printed stationery especially the hard packs for cigarette packing through modern and scientific ways and work towards promoting counterfeit and then raise their voice in government avenues to turn policies in their favours. If they wanted to stop illicit manufacturing, why would they lobby tooth and nail to avoid track and trace technology coming to Pakistan? It has been more than ten years since FBR issued the first tender for high tech system of the tax stamps to be launched in Pakistan which can control the illicit production of tobacco by feeding live info to FBR of manufacturing. However, big tobacco has been successfully lobbying against it. Each time the tender is issued, the spin doctors come into action and start pressing and maneuvering the government to do the right thing (yes in their favour). Even Asad Umer announced track and trace to control illicit cigarette, but he had to take it back his announcement just what happens every time since 2002.
On smuggling, the favorite brands are brought to Pakistan via Afghanistan through Torkham and Chaman borders freely by them. Since MNCs affiliates in Central Asia initially produce these, so one of their markets gets profits on behalf of our national loss all in terms of employment, taxation and foreign exchange.
It is easy and practical for them to stop the traffic of their original cigarettes through illegal means to Pakistan by restricting their sales partners. If Pakistan market is having the potential for these products, so the same may please be channelized through import route, to generate revenues for the nation.
And finally, their corporate relations in order to influence policy making and its execution are unmatchable. It is favouring government officials through covered manners, such as employing close relatives of policymakers from politicians to FBR and the Ministry of Commerce to influence policy making and its execution.
That’s not it, there was the provision of vehicles for patrolling for FBR officials in 2016 and during 2017 and 2018 one company issued high luxury jeeps to all the inspectors of Federal Board of revenue for patrolling purposed, so the board was compelled to work on MNCs agenda and deprived the local business of fair competition. Cash vouchers of a high profile shopping center of Peshawar were gifted to the RTO Peshawar Inspector as prize money thus bribing them differently.
But the icing on the cake is the current FBR chairman who happens to be the auditor of one of the big tobacco since its acquisition in Pakistan (2007). Auditor’s job is to find the ways to avoid taxes, and we all saw that even after the announcement of the health tax on the cigarette before budget by the PM advisor on health Dr. Zafar Mirza, it was skipped entirely from the actual budget. We also saw how cleverly the 3rd slab of tax was merged with the 2nd slab, and the tax was imposed on the upper slab to fool the tobacco control associations and WHO. Only an auditor can come up with such tactics to save his client.