Pakistan: Stamps on Cigarette Packs Impedes Revenue Collection

Source from:  ONLINE International News Network (pk)  03/28/2013

FBR should refrain from adopting any process that is illegal and ultra vires of rules and laws while being impractical and detrimental to the generation of government revenue, say Small Cigarette Manufacturers Association and International Cigarette Industries.

They point out that the haste shown in seeking proposals and adopting the "Procurement Tax Labels and Supervision System" for cigarette packs has created doubts that the entire process was motivated to favour a particular supplier who wanted to sell FBR his outdated and useless technology.
They note that such an illegal and ultra vires process about which even the Public Procurement Regulatory Authority of Pakistan has raised issues, could scandalize the government, both within and outside the country, and also create accountability and transparency issues.

When Turkey and Brazil introduced such tax stamps, counterfeit stamps appeared in those countries within three weeks. Therefore, one fails to understand how would FBR ensure that unscrupulous elements do not resort to using counterfeit stamps in Pakistan, or simply putting a new tiny stamp would help it in revenue collection, especially when Pine cigarettes are being sold here illegally without the mandatory health warning on 40% of its pack.

In fact, the entire bidding process was in violation of the Public Procurement Regulatory Authority Rules, 2004 because it violated Rule 10 which mandates widest possible competition and not favouring any single contractor or supplier. Besides, it bypassed Rule 15 pertaining to the mandatory pre-qualification process and did not give bidders enough time to respond as required under Rule 13. Furthermore, it did not mention any procurement method which, under Rule 36, was required to be on least cost basis, and also the evaluation criteria under Rules 23 and 29.

These lacunae not only nullify and vitiate the entire bidding process but might also create serious doubts about its bona fide, especially when Public Procurement Regulatory Authority of Pakistan and many international suppliers have expressed concerns about the adopted process.

They point out that if laws currently on the statute books are not being effectively and consistently enforced by FBR how it would be able to enforce the new measure of tax stamps on cigarette packs. Instead of introducing an impractical new measure, they urge that FBR should take concrete and sustainable steps to enforce the existing laws, adding wherever laws have been enforced effectively, these have helped in curbing the menace of smuggling.

It may be pointed out that the cigarette industry provides gainful employment to thousands of people, especially in the under-developed and insurgency-hit Khyber Pakhtunkhwa Province of Pakistan. Enditem