Illicit cigarettes costing govt Rs300bn a year – Business

ISLAMABAD: A study by the Institute for Public Opinion Research (IPOR) has revealed that around 54 per cent of cigarette brands sold in Pakistan were illicit, leading to a loss of around Rs300 billion annually in taxes and duties.

The study findings, shared with media on Friday, disclosed that around 413 cigarette brands were available in Pakistan and only 19 were fully compliant with the Track and Trace System (TTS), 13 were partially compliant, 95 featured the Graphic Health Warning (GHW), and 286 lacked both the tax stamp and the GHW.

IPOR Executive Director Tariq Junaid highlighted that the survey was conducted at 1,520 retail outlets across 19 districts, and the study revealed that compliance with the TTS, introduced in 2021 as a key measure to curb illicit cigarette trade, remains highly inadequate.

While the mandatory implementation of GHWs was introduced in 2009, even after 16 years, cigarette packs without the required larger warnings continue to be sold without any government enforcement.

Questions raised over poor implementation of track and trace system

Among these non-compliant brands, 45pc were smuggled, while 55pc were locally manufactured duty-not paid brands.

The study found that 332 brands were being sold below the legal minimum price of Rs162.25 per packet with some available for as little as Rs40. This rampant violation of minimum price results in significant revenue losses for the government.

“The high prevalence of non-compliant and smuggled cigarettes deprives the government of much-needed revenue,” Mr Junaid said, adding the situation needs immediate redressal to curb this revenue loss through strict point of sale enforcement.

At the same time, the study found non-compliance was more prevalent in rural areas than urban localities, and the relevant implementation authority — the Federal Board of Revenue — has to target enforcement efforts in rural markets where illicit products are more prevalent.

IPOR has called upon the government to strengthen enforcement efforts and to impose existing penalties.

The organisation also urges tobacco manufacturers and retailers to play their part in ensuring compliance with all relevant regulations.

Published in Dawn, February 22nd, 2025