Volumes decline as illicit cigarette trade grows to 41% of the total market in March 2017
LAHORE ( HAFEEZ REPORT )
Pakistan Tobacco Company Limited (PTC), has contributed Rs. 15 billion to the National Exchequer in the form of Excise Duty, Sales Tax, Income Tax and Custom Duties during first quarter of 2017 ended at March 31, 2017. The Company has announced its results for first quarter of 2017, whereby it posted a net turnover of Rs. 7,356 million and earnings per share of Rs 5.93.
The Chairman of PTC stated that it has been a difficult period for the Company. Illicit cigarette trade has seen an alarming rise, causing a decline in legitimate industry volumes. In the first quarter of this year, PTC has seen a decline in volumes by 48% compared to the first quarter of last year, 2016. Despite recent efforts by the law enforcement agencies, illicit sector grew to an unprecedented market share of 41% as at March 31st 2017. Not only does illicit cigarette trade negatively affect the legitimate industry, but also negatively impacts Government in the form of losses in potential revenues, as well as declining revenues from legitimate industry.
It is important that the Government enforcement mechanism becomes more effective in order to create a level playing field and ensure that the illegal sector complies with all the laws. This is critical for the sustainability of Government revenues and legitimate tobacco industry, in the short as well as long run.