A recent study revealed that Pakistan loses an estimated Rs325 billion every year in tax revenue from the tobacco sector.
Institute of Public Opinion Research conducted the report and highlighted alarming statistics, showing that illegal sales account for 54% of cigarettes in the country.
Findings indicate that most cigarette manufacturing companies fail to follow health warning regulations, and track-and-trace system remains ineffective in preventing illegal sales. This lack of control has caused significant tax revenue losses.
Tobacco Tax Due to Violations of Govt Regulations
Research also uncovered widespread violations of government regulations on cigarette prices. Some brands sell for as low as Rs40 per pack, far below the minimum legal price of Rs162.25.
Study surveyed 19 districts and discovered that out of 413 cigarette brands, only 19 carried the required tax stamp and health warnings. Shockingly, 286 brands had neither of these essential markings.
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Despite the law requiring health warnings on cigarette packs since 2009, many brands continue to ignore this rule, increasing public health risks. Government introduced track-and-trace system in 2021 to reduce tax evasion in tobacco industry, but its incomplete implementation allows more than half of all cigarettes to be sold illegally.
Additionally, smuggled and non-duty-paid cigarettes significantly contribute to country’s financial losses, estimated to be between Rs300 and Rs325 billion annually.
Weak enforcement and widespread illegal cigarette sales continue to undermine Pakistan’s efforts to increase tax revenue from tobacco sector and protect public health. Authorities must strengthen monitoring, impose effective penalties, and raise public awareness to address this issue and reduce economic damage caused by tax evasion in tobacco industry.
Authorities must take immediate action to enforce strict regulations and curb tax evasion in tobacco sector. Without urgent intervention, Pakistan will continue to lose valuable revenue while public health risks escalate.