Tobacco

Pakistan is number 1 in Asia for illegal cigarette consumption
based on a study across 16 countries in Asia [1]

In other countries, majority of the illegal cigarette consumption is in the form of smuggled cigarettes, however, Pakistan is plagued primarily by illegal cigarettes which are manufactured locally [2].

In 2017, off the 77.8 Billion cigarette sticks consumed in Pakistan, 41.9% of that market is captured by illegal cigarettes which account for 32.6 Billion non-tax paid cigarettes [2]. This amounts to an estimated

Loss of Rs. 44 Billion every year to Pakistan in terms of tax revenue losses [3]

Illicit Cigarette Consumption in Asia for 2017 (Billion of Sticks)  [1]


“Only two tobacco companies, with a market share of around 60% contribute 98% of the tobacco tax collection, whereas all other tobacco companies operating illegally contribute only 2% to the national exchequer despite having a market share of about 40%.”

– Prime Minister Imran Khan’s speech on his ‘First 100 days in Government’

Illegal Cigarette Consumption in Pakistan (Billion of Sticks)[1]

Violations in Price

A pack of locally manufactured illegal cigarettes has an average selling price of Rs. 20-35 [4]

This is in violation of the Federal Excise Act 2005 set by Government of Pakistan which mandates a minimum legal price of a cigarette pack at Rs. 62.75[5]. Therefore, this becomes a clear case of tax evasion as the tax to be collected on a pack of cigarettes is Rs. 42.11[5], whereas, the price for a pack of illegal cigarettes is far less than the amount of tax owed for it. In addition to the harm caused in tax revenue collection, the

Low-price point of illegal cigarettes leads to smoking initiation especially amongst the youth [6]

as it makes it easier for them to get their hands on a pack of illegal cigarettes.

Violations in Promotion

The Government of Pakistan has laid down strict laws against promotion of tobacco products, however,

Illegal cigarette manufacturers frequently break such laws by advertising to youth [6]

showcasing people in their advertisements, holding lucky draws, giving gifts and incentivising users to continue using their illegal cigarette brands.



References