The government is losing as much as Rs240 billion per annum as non-duty paid cigarettes of various brands are available in abundance all over Pakistan, a survey report has claimed.

According to a report by IPSOS, a global market research and public opinion specialist, the authorities have “failed” to effectively deploy the track-and-trace system in the industry. Due to this, it added that around 83 per cent of cigarettes have been sold without any documentation.

Industry experts say that higher duties on cigarette sales fuel the illicit trade. The Federal Board of Revenue announced on February 14 a massive increase in federal excise duty (FED) on the sales of cigarettes.

The rate of duty was increased to Rs16,500 per thousand cigarettes on locally produced cigarettes if their on-pack printed retail price exceeded Rs9,000 per thousand cigarettes. The rate of duty was hiked to Rs5,050 per thousand cigarettes on locally produced cigarettes if their on-pack printed retail price did not exceed Rs9,000 per thousand cigarettes.

The report states that around 128 brands’ cigarette packets “do not carry a track-and-trace stamp”, resulting in a huge part of the industry remaining undocumented.

While the policymakers try to prioritise safeguarding public health by imposing higher taxes on the cigarette industry, the report said that an increase in the illegal sales of cigarettes is incurring substantial economic losses and costing the country billions of rupees annually.

Despite implementing higher taxes on cigarettes, smoking rates in Pakistan continue to escalate, casting doubt on the government’s approach of using taxes as a deterrent to protect public health.