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'55% of local cigarette producers evade taxes'

'55% of local cigarette producers evade taxes'

Express Tribune23-05-2025

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The Institute for Public Opinion and Research (IPOR) released its research report today during a press briefing in Lahore. The report sheds light on the alarming rise in the illicit cigarette trade across Pakistan and the gaps in enforcing existing tobacco control laws.
During the briefing, IPOR Executive Director, Tariq Junaid revealed that more than 54% of cigarette brands available in the market are in blatant violation of national laws, particularly the Track and Trace System (TTS) and Graphical Health Warnings (GHWs). He highlighted that despite the implementation of GHWs in 2009 and TTS in 2022, enforcement has been practically non-existent, creating space for the illegal trade to thrive. Cigarette packs without health warnings and without TTS stamps are openly being sold in the market.
He pointed out that although legislation introduced in 2019 mandated that 60% of each cigarette pack must display a graphical health warning, six years later, 286 brands are still openly sold without any health warnings. This, he noted, is a clear breach of the law. Junaid added that, much like in other areas, the Track and Trace System appears to have failed in curbing these violations.
According to the report, a survey was conducted across 1,520 retail outlets in 19 districts, identifying 413 different cigarette brands being sold. Alarmingly, only 19 brands were found to be compliant with TTS requirements while 394 brands were found without stamps.
The vast majority lacked tax stamps and the legally mandated health warnings. Moreover, 332 brands were being sold below the legal minimum price of Rs162.25, with some priced as low as Rs40 — posing not just a regulatory challenge but also causing significant loss to government revenue.
The report further disclosed that 55% of illicit cigarettes are produced locally without paying taxes, while 45% are smuggled from abroad. This unchecked illegal trade is causing an estimated annual loss of over Rs300 billion to the national treasury.
During the session, Junaid also responded to questions related to tobacco sector regulations. He stressed that each time the government increases tobacco taxes, illegal cigarette sellers are the primary beneficiaries, as the lack of enforcement drives consumers toward cheaper, illicit tax-evading alternatives.
He urged the government to take immediate and decisive action by enhancing monitoring of retail outlets nationwide, ensuring full compliance with TTS and GHWs by all manufacturers, and launching a coordinated national crackdown on the illegal cigarette trade. These actions, he stated, are critical not just for ensuring legal accountability but also for safeguarding state revenue and maintaining fair business competition.
Junaid warned that this is not merely a regulatory shortfall, but a serious economic and legal crisis that demands urgent, integrated, and effective government intervention.

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KARACHI: Cigarette industry has urged the federal government for the special measures in the budget for effective enforcement of digital monitoring tools like Track and Trace System (TTS) to collect the billions of rupees additional tax revenue. As per estimates, Pakistan's illicit cigarette market is draining over Rs415 billion annually from the national treasury, shifting an unfair tax burden onto compliant manufacturers, which are the leading tax payer sector in the country. While illegal manufacturers evade taxes and regulatory oversight, legal companies bear nearly all the tax load despite having less than half the market share. This creates a distorted market where legal businesses struggle to compete, and consumers unknowingly support illicit trade through inflated prices and limited product choices. Industry sources said that illicit trade severely disrupts market balance, forcing lawful manufacturers to shoulder disproportionate tax costs. This not only harms the industry's growth but ultimately affects consumers who pay higher prices for taxed products, they added. 'Effective enforcement of digital monitoring tools like Track and Trace is essential to restore fairness and protect government revenues,' they said. Experts warned that if preventive measures are not taken in the upcoming budget, illicit trade will continue to erode government resources needed for public services, hinder economic development, and encourage illegal business practices that undermine the rule of law in Pakistan. Industry experts emphasise that cracking down on illicit trade through enhanced regulatory frameworks can reclaim billions in lost revenue and ensure a level playing field for all stakeholders. They said that the government can earn billions of rupees revenue by fully implementing the track and trace system in the industry. Several commitments have been made in the past to address this issue; however, enforcement actions on the ground have not been taken to curtail the scale of the illicit trade. In absence of the full implementation of the Track and Trace system, illicit operators are growing freely and depriving the national exchequer of much-needed billions of rupees revenue. Copyright Business Recorder, 2025

'55% of local cigarette producers evade taxes'
'55% of local cigarette producers evade taxes'

Express Tribune

time23-05-2025

  • Express Tribune

'55% of local cigarette producers evade taxes'

Listen to article The Institute for Public Opinion and Research (IPOR) released its research report today during a press briefing in Lahore. The report sheds light on the alarming rise in the illicit cigarette trade across Pakistan and the gaps in enforcing existing tobacco control laws. During the briefing, IPOR Executive Director, Tariq Junaid revealed that more than 54% of cigarette brands available in the market are in blatant violation of national laws, particularly the Track and Trace System (TTS) and Graphical Health Warnings (GHWs). He highlighted that despite the implementation of GHWs in 2009 and TTS in 2022, enforcement has been practically non-existent, creating space for the illegal trade to thrive. Cigarette packs without health warnings and without TTS stamps are openly being sold in the market. He pointed out that although legislation introduced in 2019 mandated that 60% of each cigarette pack must display a graphical health warning, six years later, 286 brands are still openly sold without any health warnings. This, he noted, is a clear breach of the law. Junaid added that, much like in other areas, the Track and Trace System appears to have failed in curbing these violations. According to the report, a survey was conducted across 1,520 retail outlets in 19 districts, identifying 413 different cigarette brands being sold. Alarmingly, only 19 brands were found to be compliant with TTS requirements while 394 brands were found without stamps. The vast majority lacked tax stamps and the legally mandated health warnings. Moreover, 332 brands were being sold below the legal minimum price of Rs162.25, with some priced as low as Rs40 — posing not just a regulatory challenge but also causing significant loss to government revenue. The report further disclosed that 55% of illicit cigarettes are produced locally without paying taxes, while 45% are smuggled from abroad. This unchecked illegal trade is causing an estimated annual loss of over Rs300 billion to the national treasury. During the session, Junaid also responded to questions related to tobacco sector regulations. He stressed that each time the government increases tobacco taxes, illegal cigarette sellers are the primary beneficiaries, as the lack of enforcement drives consumers toward cheaper, illicit tax-evading alternatives. He urged the government to take immediate and decisive action by enhancing monitoring of retail outlets nationwide, ensuring full compliance with TTS and GHWs by all manufacturers, and launching a coordinated national crackdown on the illegal cigarette trade. These actions, he stated, are critical not just for ensuring legal accountability but also for safeguarding state revenue and maintaining fair business competition. Junaid warned that this is not merely a regulatory shortfall, but a serious economic and legal crisis that demands urgent, integrated, and effective government intervention.

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KARACHI: Inefficiency of the Track and Trace System (TTS) in the tobacco sector is causing huge losses to the tune of Rs400 billion to the national exchequer every year, industry experts said. Sharing the Institute of Public Opinion Research's 2024 (IPOR) findings, they said the unchecked illicit tobacco trade thrives in Pakistani markets. The study showed compliant brands follow all the requirements stipulated by the Government of Pakistan. These requirements include having a Track and Trace Stamp, a graphical health warning, a printed retail price, an underage warning, and the manufacturer's name on the packaging. These brands are also compliant with the Brand Licensing Regime of the Federal Board of Revenue (FBR) and are sold above the minimum legal price of Rs162.25. The study further explored that locally manufactured duty-not-paid brands do not comply with one or more of the stipulated requirements by the government. These brands also fail to comply with the Brand Licensing Regime of the FBR and are sold below the minimum legal price of Rs162.25. Smuggled brands are completely non-compliant with the requirements. These brands do not have a Track and Trace Stamp and other guidelines lay down by the Government of Pakistan. Regarding Track and Trace System (TTS) compliance at the point of sale, a total of 413 brands were found in the market. Out of these, only 19 brands had the TTS stamp in all areas. Thirteen brands were found both with and without the TTS stamp. Ninety-five of the brands were locally manufactured and did not have the TTS stamp. Additionally, 286 smuggled brands were found without the TTS stamp. Industry expert Osama Siddiqi said the economic impact will further deteriorate if these illicit brands remain unchecked. To solve this issue, he advised the authorities to ensure TTS coverage and routine inspections. Copyright Business Recorder, 2025

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