Illicit Cigarette Smuggling: A Significant Economic Threat to Pakistan

Regulations by 2FIRSTS.ai
May.22.2024
Illicit Cigarette Smuggling: A Significant Economic Threat to Pakistan
Pakistan's NUST report reveals $11 billion annual losses from illegal cigarette smuggling, highlighting need for tax reforms and enforcement.

According to a report released by Pakistan's National University of Science and Technology (NUST) on Tuesday, the illegal smuggling of cigarettes causes an annual loss of over 310 billion Pakistani rupees (11 billion USD) to the country's economy.

 

During a press conference, Pakistani Defense Minister Khawaja Asif claimed that if the internal system issues and enforcement loopholes within the Federal Board of Revenue (FBR) are addressed, Pakistan could potentially generate a total of 36 trillion rupees ($129.2 billion USD) in tax revenue, instead of the current 9 trillion rupees ($32.3 billion USD).

 

Minister Ashif expressed regret that tax evaders have infiltrated the parliament. He further emphasized and criticized the undervaluation and poor management of government assets, resulting in significant losses in government revenue. Ashif stressed the need for comprehensive reform and stricter enforcement to curb illegal transactions and increase tax revenue.

 

The NUST report has identified the potential annual tax revenue for the tobacco industry at 551 billion rupees ($1.9 billion), but it is projected to reach only 242 billion rupees ($800 million) by the fiscal year 2023-24.

 

The report emphasizes the importance of the tobacco industry's revenue in reducing the fiscal deficit. The report indicates that there is an increasing trend of consumers turning to illegal cigarettes, with illegal cigarettes currently occupying 73.5% of the market, while the legal market only occupies 36.5% of the tobacco industry.

 

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