Fawad Khan, spokesperson for Mustehkam Pakistan, stressed the urgent need for the government to take immediate and decisive action against illicit trade to boost revenue and lessen the tax burden on ordinary citizens. “It’s almost six weeks since the budget, yet illegal items are still flooding the market,” he pointed out. Mustehkam Pakistan, an advocacy group focused on combating illegal trade and tax evasion, is highly concerned about the issue’s adverse effects on the economy and marginalized communities.
Khan warned that without expanding the tax base and implementing a comprehensive track and trace system alongside effective curbing policies, the government will struggle to meet its tax-to-GDP ratio target of 13%. A recent report from a foreign research institute revealed that approximately 1 trillion rupees are evaded annually in significant sectors such as real estate, pharmaceuticals, tires and lubricants, tea, and cigarettes.
“Tax evasion from the illegal cigarette trade alone costs the national exchequer over 310 billion rupees each year, with expectations of further increases,” Khan added. He cautioned that if all cigarette brands are not subject to digital monitoring, the illegal trade volume could reach 65% this year, complicating matters for both the legitimate industry and the government.
The DG ISPR recently stated in a press conference that 50-60% of cigarettes in Pakistan are sold illegally, resulting in significant economic losses. Similarly, former Prime Minister Shahid Khaqan Abbasi highlighted that billions of rupees are lost due to the sale of illicit cigarettes, with government authorities too weak to collect taxes from illegal manufacturers.
Khan emphasized that if the government fails to implement the track and trace system effectively this time, achieving the tax target for the financial year 2024-25 will be exceedingly difficult. A shortfall in tax revenue would likely force the government to borrow more, further destabilizing the economy and increasing the debt burden.
