May 10: Stakeholders have expressed their concerns that the domestic production of cigarettes has been affected due to the increase in smuggling of cigarettes. They have demanded to stop the sale and distribution of counterfeit cigarettes that are openly sold in Kathmandu and the Terai region.

Businessmen say that a large amount of revenue is being leaked due to smuggling of cigarettes. Surya Nepal, a domestic cigarette manufacturer, said that with the increase in number of tourists after the decline in Covid-19 cases, the trade of illegally imported cigarettes has increased as well. An official of the company said that illegal (smuggled) cigarettes are sold and distributed in the market unhindered.

“As a result, the domestic industries have lost market and the government has lost revenue. If the smuggling is not controlled, the government won’t be able to collect revenue and the consumption of such products will increase as well,” said the official.

The company also stated that the sale of counterfeit cigarettes has increased in the Kathmandu valley. The official said that cigarettes of international brands are now available in the market targeting tourists.

“Raising taxes also makes a difference in the consumption of cigarettes. Every aspect should be analyzed before imposing taxes on tobacco products. The government should not make decisions based solely on just a single aspect,” the official further said.

The official added that the government should take policy only after analyzing the situation of production of domestic tobacco companies. He said that even though the tax on tobacco products is low, the highest selling Pilot cigarette of Surya Nepal pays 70 percent tax. He said that raising the tax would increase the price of cigarettes and it would lead to consumption of other tobacco products like ‘gutkha’ and reduce revenue collection as well.

The official added that the illegal trade of cigarettes has been taking place in Nepal in two ways -- cigarettes of international brands are being traded illegally in big cities including Kathmandu and Pokhara and counterfeit cigarettes of Nepali brand are being imported from India in the border areas.

 Till date, 55 to 70 percent taxes have been levied on the sales of cigarette. Cigarettes are subject to excise duty, health risk tax, value added tax, customs duty and other taxes.