97 percent of cigarette retailers in Pakistan never contacted by tax officials — study

Arab News

a day ago

KARACHI: Nearly all cigarette retailers in Pakistan have never been contacted by tax officials, according to a new public health study that blames weak enforcement and low awareness for the country's growing illicit tobacco trade.
The report, released on Friday by the nonprofit Umeed-e-Sehar, surveyed 2,000 retailers across seven major cities and found widespread gaps in knowledge about tax stamps, legal compliance and penalties for illegal sales. The nonprofit warned that these lapses are enabling the black market in cigarettes to thrive and undercutting public health policy and government revenues.
Pakistan's cigarette industry sees an estimated consumption of 80 billion sticks annually, involving over 50 local and international manufacturers. Illicit sales have long been a challenge for regulators and health advocates, but the study suggests the scale of the problem may be far greater than previously acknowledged.
'97 percent of retailers reported that FBR officials had never approached them for compliance guidance, while 86 percent were unaware of government-imposed penalties for selling illicit cigarettes,' the report said.
The study, titled 'Tax Stamps and Illicit Cigarette Sales in Pakistan: Understanding Retailers' Knowledge Gap,' also found that only 27 percent of retailers could differentiate between tax-paid and illicit cigarette packs while 73 percent did not know the correct placement and purpose of tax stamps:
'The majority of retailers, about 86 percent, identified price as the primary indicator of cigarette legality rather than checking for tax stamps, which only 12 percent of them considered.'
Nearly 59 percent of retailers estimated that between 30 to 60 percent of cigarette packs in their inventory lacked tax stamps, while 29 percent believed more than 60 percent were illicit.
The report noted that while the Federal Board of Revenue (FBR) introduced the TransAct App to help verify tax stamps, 98 percent of the surveyed retailers were unaware of its existence, and 99 percent never used it.
'Consumer promotions and advertisements promoting cheaper, untaxed cigarettes influenced 43 percent of retailers, while 31 percent cited high demand and low pricing as major factors,' the study said.
'These results show an immediate need for stricter regulatory oversight, including increased inspection frequency and harsher penalties to curb illicit trade.'
The report recommended region-specific interventions to address localized challenges in the illicit cigarette trade and enhanced collaboration between the FBR and local law enforcement agencies, along with 'targeted awareness campaigns and retailer training on tax stamps, legal requirements, and the risks of selling illicit cigarettes, supported by digital outreach and community programs.'