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  • Pakistani Vape Vendors Accuse Govt of Harassment as Court Case Proceeds

    Pakistani Vape Vendors Accuse Govt of Harassment as Court Case Proceeds

    On July 3, Pakistan’s Lahore High Court (LHC) disposed of over 100 petitions from vape and e-cigarette vendors across Punjab, barring authorities from taking enforcement action until proper legislation is in place. The petitioners alleged police harassment despite their shops being officially reopened. A government lawyer countered that no formal crackdown was underway and said a draft law to regulate vaping was being prepared, with stakeholder input to be considered.

    The court emphasized that the right to trade is constitutionally protected and questioned the legitimacy of enforcing restrictions without a legal basis. It ruled that no action can be taken against vape businesses until relevant legislation is enacted.

    On June 3, Chief Minister Maryam Nawaz announced a provincial ban on e-cigarettes and ordered vape shops to be sealed. Weeks later, LHC Justice Anwar Hussain said the government failed to justify the crackdown legally and issued a stay order, halting further action until a final decision is made.

  • Pakistan Ordered to Reopen Vape Shops 

    Pakistan Ordered to Reopen Vape Shops 

    Pakistan’s Lahore High Court granted interim relief to vape shopkeepers in Punjab by ordering the reopening of shops closed by the provincial administration. The decision follows a petition by 74 vape dealers, arguing the closures were illegal and without notice.

    Justice Anwar Hussain said the government failed to justify the crackdown legally and issued a stay order halting further action until a final decision is made. The Punjab government has until July 3 to submit a formal reply.

    The vape shops were sealed following a provincial ban on e-cigarettes announced on June 3 by Chief Minister Maryam Nawaz to “protect youth health.” Petitioners claim the ban is unconstitutional and violates their right to lawful business.

  • Tax Hike Diverted Cigarette Sales: LUMS

    Tax Hike Diverted Cigarette Sales: LUMS

    Image: alexlmx

    Pakistan’s 2023 federal excise duty (FED) hike on tobacco products has diverted rather than reduced cigarette consumption, reports The News International, citing recent research.

    In 2023, the government announced a significant cigarette tax hike, prompting tobacco companies to more than double their cigarette prices.

    The fiscal measure aimed to boost revenue and discourage smoking. However, a recent study conducted by the Lahore University of Management Sciences (LUMS), suggests it has achieved neither objective.

    Instead of lowering smoking rates, the increased prices have prompted consumers to source their cigarettes from informal sources, a development that will likely cause the government to miss PKR300 billion ($1.08 billion) in tax earnings this year, according to LUMS.

    The LUMS study found that the share of duty-paid cigarettes shrank to 42 percent over the past two years.

    “Government has implemented various initiatives to address the extent of illicit sector to bring more companies and illicit sector under tax net,” said LUMS Associate Professor of Economics Kashif Zaheer Malik. “These, however, have not been successful in reducing illicit trade in Pakistan.”

    In light of Pakistani smokers’ profound price sensitivity, the LUMS report urged the government to reconsider its excise tiers. It also said the success of Pakistan’s track-and-trace system would depend on an all-encompassing rollout and consistent enforcement.

    Only a handful of Pakistan’s cigarette manufacturers have implemented the new system.

    In related news, the government of Pakistan’s Khyber Pakhtunkhwa (KP) province announced a 400 percent tobacco tax increase.

    Civil society groups welcomed the measure. “This substantial increase is projected to generate over PKR2 billion annually, which will be dedicated to enhancing health facilities across KP,” Blue Veins and the Provincial Alliance for Sustainable Tobacco Control wrote in joint statement.

    Tobacco growers warned the tax hike would destroy the sector. “The farmers can’t afford this and will stop growing tobacco,” Pakistan Tobacco Board member Rustam Khan was quoted as saying by The News International.

    “Tobacco crop is the only cash crop of the province. And around 1.2 million people in the province depended on it,” said Khan, adding that more than 75,000 farmers were involved in tobacco cultivation.

    Tobacco taxation has been a contentious topic in Pakistan recently. In May, market leader Pakistan Tobacco Co. threatened to cease operations in the country if the government further increases cigarette taxes.

  • BAT Threatens to Pull Out of Pakistan

    BAT Threatens to Pull Out of Pakistan

    Photo: Rawf8

    British American Tobacco may pull out of Pakistan if the government further increases cigarette taxes, a company representative warned during meetings with Prime Minister Shehbaz Sharif and the Special Investment Facilitation Council national coordinator General Sarfraz Hussain.

    According to BAT, existing taxation has already caused its sales in Pakistan to slump by 38 percent and increased the size of the illicit market to 58 percent of nationwide cigarette sales. In the previous budget, the government significantly increased taxes on tobacco, which instead of curbing smoking resulted in shifting smokers from tax-paid expensive brands to cheaper illicit brands, the company noted.

    “The past couple of years’ developments on fiscal policies have raised questions about the sustainability of the company’s operations in Pakistan,” Michael Dijanosic, BAT’s regional director for Asia Pacific, Middle East and Africa, was quoted as saying by The Express Tribune.

    If there is a repeat of last year’s tax increase, there is no reason the company should not exit Pakistan, he said.

    The past couple of years’ developments on fiscal policies have raised questions about the sustainability of the company’s operations in Pakistan.

    Michael Dijanosic, regional director for Asia Pacific, Middle East and Africa, BAT

    The regional director said that the federal excise duty increased by 73 percent in real terms, making it unviable to do business. He also said that despite a 73 percent inflation-adjusted increase in taxes, the government’s revenues grew only 8 percent in real terms due to the slump in sales.

    Any further increase in federal excise duty rates in the budget would bring the company’s factories to a standstill, the BAT official warned.

    According to Dijanosic, the formal tobacco sector paid nearly PKR700 billion ($2.51 billion) in taxes to the government during the past five years. PTC has also invested in a global business center in Lahore and plans to expand operations if the government reviews its taxation policies.

    PTC has been exporting cigarettes to numerous markets since 2019 and has so far earned $156 million for the country. For the next fiscal year, the company is targeting $60 million in exports, but one-third of the order is at stake due to the Ministry of Health’s reluctance to amend the Statutory Regulatory Order, which prohibits the sale of cigarettes in packs of 10 sticks, for export orders.

    In March, the prime minister awarded the second-highest taxpayer award to PTC in all categories of taxes.

  • Pakistan Expects Tax Hike to Boost Revenue

    Pakistan Expects Tax Hike to Boost Revenue

    Image: Tobacco Reporter archive

    Pakistan’s government expects to collect PKR60 billion ($211.42 million) in additional revenue after increasing the federal excise duty on tobacco products, reports the Pakistan Observer.

    The government dismissed concerns about black market sales.

    The multinational tobacco industry has incorrectly claimed that illicit cigarettes make up 40 percent of the market, according to the government, which cited independent studies showing that illicit products only account for 18 percent of the market.

    According to the Pakistan Observer, the industry is overstating the volume of illegal sales to put pressure on the government following the tax increase.

    The implementation of a track-and-trace system has helped decrease illicit products, according to Malik Imran, country head of the Campaign for Tobacco-Free Kids. “Tentatively, we can say the volume is now negligible,” he said. 

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