Islamabad, February 21, 2025: Pakistan is losing an estimated Rs325 billion annually in tax revenue due to widespread tax evasion in the tobacco sector, a recent study by the Institute of Public Opinion Research has revealed.
The report highlights that 54% of cigarettes sold in the country are illegal, with manufacturers failing to comply with health warning regulations. Despite the introduction of a track-and-trace system in 2021 to curb tax evasion, its ineffective implementation has allowed illegal cigarette sales to persist.
The study found widespread violations of government-mandated pricing, with some cigarette brands being sold for as little as Rs40 per pack—far below the legal minimum price of Rs162.25. A survey across 19 districts examined 413 cigarette brands, revealing that only 19 carried the required tax stamps and health warnings, while 286 had neither.
Although health warnings on cigarette packs have been mandatory since 2009, enforcement remains weak, allowing non-compliant products to flood the market. Smuggled and non-duty-paid cigarettes continue to contribute significantly to the country’s financial losses, estimated between Rs300 and Rs325 billion annually.
The report underscores the urgent need for stricter enforcement of tax regulations and anti-smuggling measures to curb illegal tobacco sales and recover lost revenue.
