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
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