Tobacco Company Limited (PTC), has contributed Rs 15 billion to the national exchequer in the form of excise duty, sales tax, income tax and customs duties during the first quarter of 2017 ended on March 31, 2017. The company has announced its results for the 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 per cent, compared to the first quarter of last year, 2016. Despite recent efforts by the law enforcement agencies, the illicit trade has grown to an unprecedented market share of 41 per cent as at March 31st, 2017. Not only does illicit cigarette trade negatively affect the legitimate industry, but also negatively impacts the government in the form of losses in potential revenues, as well as declining revenues of the 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.