Pakistan: Cigarette Retailers Start Overcharging after Budget

Source from:  The Nation 06/08/2015

After the announcement of increase in duty on tobacco products to 63 per cent from 58 per cent, the retailers have started selling old stocks of cigarettes at new (inflated) rates, even before the implementation of the government's decision which was announced in the budget.

The retailers are charging extra Rs10 to Rs15 per pack for different brands but no government agency is taking action to stop this unfair practice, which is hitting the cigarette consumers hard.

The market sources said that retailers and distributors of cigarettes already created an artificial shortage ahead of the federal budget, anticipating an up to Rs20 increase in per pack price due to increased duties and taxes.

In the budget, the prices of premium brands of cigarettes were increased in the range of Rs10 to Rs20 crossing the level of Rs110-130 per pack, whereas rate of low value brands reached the figure of Rs50 to Rs60 per pack.

Market sources said that cigarette hoarding occurs annually before the budget.

Anticipating a price hike, sellers and distributors hoard packs to mint money from the consumers.

They said the manufacturers are also involved in this business.

They supply old stocks to distributors to finish their outdated inventories.

The tobacco industry officials said that anticipating the expected increase in the rates, the distributors and sellers began hoarding the various brands of cigarettes, especially the premium category.

In the markets, Pakistan Tobacco Company premium brand cigarettes are being sold between Rs100 and Rs125 per pack, almost Rs5-15 higher than the official rates.
In some areas Rs95 a pack is being sold at Rs110 and other brand at Rs120 a pack.

Similarly, the Philip Morris International (PMI) premium categories are also sold almost Rs10-15 per pack higher than the official rates. Enditem