A Dilemma of Minimum Price Violations

How is it when the tax on a pack of cigarettes ranges from Rs. 42.12 all the way to Rs. 130, yet packs can be purchased for as low as Rs. 15. 

Should not this raise alarm bells for public health activists? A call to keep increasing cigarette prices is there, but whats the point when illicit cigarette packs are still being sold at the same prices that they sold at almost a decade ago.

According to estimates, more than 200 cigarette brands are selling in Pakistan for less than the minimum tax of Rs. 42.12. How is it even possible for a person to be able to buy a cigarette pack at an illegal price, below the minimum mandated price per pack of cigarettes i.e. Rs. 62.76?

The way in which minimum tax and price violations take place is shocking. Perpetrators involved in this illicit trade in cigarettes have an ideal method that has been adopted since decades that allows them to evade in plain sight, out in the open.

So take a locally manufactured cigarette brand versus a smuggled one – easy to spot, no health warning as per Pakistani laws means it is a smuggled pack and therefore illegal to buy or sell.

But within the packs manufactured in Pakistan, local illicit cigarette brands comply with the visible health warnings for a unique reason. So you take a local illicit pack versus a legal cigarette pack, there is no visible difference – health warning laws are complied with, unlike the easy differentiator with smuggled brands.

The price printed on the local illicit pack will invariably be higher than the mandated minimum price per pack as per Government. Now, here’s the spin. When a consumer buys the illicit pack, it may read Rs. 65 on the pack, but sells usually between Rs. 30 to 40. This age old method to evade taxes has led these local illicit brands to hide in plain sight, while making smoking affordable for the masses.

Till this strategy by the illicit cigarette sector is not effectively dealt with, the low pricing of illicit cigarette packs that are violating numerous laws of the country will keep continuing to make smoking affordable.
Author : Umair Khan