A shocking survey by the Institute of Public Opinion Research has revealed that 54% of cigarettes sold in Pakistan are illegal, leading to massive tax evasion and financial losses worth billions to the national exchequer.

The report highlights the failure of the “track and trace system” in regulating the tobacco industry, resulting in a historic surge in illegal cigarette sales and tax fraud.

The survey was conducted across 19 districts, where researchers identified 413 cigarette brands.

Alarmingly, only 19 of these brands carried the Federal Board of Revenue’s Track and Trace tax stamp, while a significant number failed to comply with government-mandated regulations.

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Among the surveyed brands, only 95 displayed the official pictorial and written health warnings required by law, while 286 brands had neither health warnings nor tax stamps.

The report further revealed that many cigarette brands were being sold below the government’s minimum price of Rs162.25, raising serious concerns over tax evasion and illegal distribution.

The report sheds light on a regulatory failure that has allowed illegal cigarette sales to flourish.

Regulatory failures

Pakistan introduced pictorial health warnings on cigarette packs in 2009, yet 16 years later, unregulated brands continue to flood the market. In 2021, the Track and Trace System was implemented to curb tax evasion, but the survey indicates widespread non-compliance.

FBR cracks down

In response, the FBR recently seized cigarette cartons from a major company for selling below the mandated price.

However, with 332 cigarette brands violating pricing regulations, experts argue that enforcement remains weak.