Over 42% of cigarettes sold are illegal: report

Reason behind surge in illegal cigarette sales is the significant increase in federal excise duty

Our Correspondent June 11, 2024
An employee counts cigarettes before packing them in Sidoarjo, Indonesia's East Java province April 7, 2010. PHOTO: REUTERS


Illegal cigarettes are flooding the markets in Pakistan, with a shocking 42.4 per cent of all cigarettes being sold unlawfully, reveals a survey report.

This startling revelation comes from a recent report by the think tank FFO, which investigated the illegal cigarette trade in four districts of Punjab.

The report, based on a survey conducted last month, highlights a worrying trend. Since 2019, the illegal cigarette trade has surged by a staggering 171 per cent. In 2019, the market share of illegal cigarettes stood at 15.66 per cent, showing a dramatic increase in just a few years.

Evidence of this illegal trade was found in various districts, including Lahore, Kasur, Sheikhupura, and Nankana. Shockingly, 42.4 per cent of cigarettes observed in these districts were found to be illegal, smuggled, and non-duty paid.

One of the main reasons behind this surge in illegal cigarette sales is the significant increase in federal excise duty (FED). The report suggests that the rise in FED has led to negative consequences, including a boost in the market share of illegal cigarettes and a reduction in tax collection from tobacco companies. Despite efforts by the government to curb this illegal market, it seems to have failed.

The survey report paints a grim picture, describing the domestic market as a haven for cigarette smugglers and tax evaders, resulting in billions of rupees in lost tax revenue annually. The report emphasizes the urgent need for the implementation of a track and trace system to eradicate illegal cigarettes.

The report underscores the urgent need for implementing a track and trace system to eradicate this issue. It highlights the prevalence of smuggled cigarettes in Punjab's markets, prompting the Ministry of Finance and the Federal Board of Revenue to take action and address the growing market share of illegal cigarettes.


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