Pakistan tops in illegal cigarette sales in Asia as two out of every five cigarettes sold in Pakistan are illegal and tax evaded. According to industry statistics, the annual consumption of cigarettes in Pakistan is 70 to 80 billion sticks in which 40% is captured by tax evading illicit sector.
During the last three years, the volume of illicit trade in cigarettes in Pakistan has increased rapidly from 23% in 2018 to 34% in 2019 and to 40% by 2020.
The market share of legal cigarettes has decreased by the same proportion. In 2018 the market share of legal cigarettes was 77%. Which was decreased to 66% in 2019 and to 60% in 2020.
“The loss to the national exchequer due to illegal sale of cigarettes in Pakistan is estimated at Rs 77 billion annually. With this huge amount of money, 4 million children can be educated annually or 17 million people suffering from malnutrition due to poverty can meet their food needs three times a month,” said Amna Saleem, spokesperson Stop Illegal Trade.
She said that due to the lack of uniform implementation of national laws and government policies we have witnessed the mushroom growth of illicit sector in numerous sectors with tobacco being the leading sector.
She said that this strengthens the non documented sector which is not only depriving the Government of revenue but also poses serious social, security and health challenges.
“Global institutes have already pointed out that the illicit tobacco sale in Pakistan is getting stronger everyday. We have to act swift and consistently to ensure the elimination of undocumented sector,” Amna opined.
She said that illegal cigarettes sold in Pakistan include locally manufactured tax evaded cigarettes, as well as smuggled cigarettes and counterfeits, while adding, “lack of effective policies and crackdown on elements involved in illicit trade are fueling this trend and Pakistan is rapidly rising in the list of countries involved in illicit cigarette trade.”
Experts have suggested the Government to monitor and tax the green leaf threshing process so that no tobacco goes unnoticed and untaxed.
It is pertinent to mention that 98% of the estimated Rs 100 billion in cigarette taxes come from only two companies while 50 cigarette companies only contribute 2%.