'55% of local cigarette producers evade taxes'

IPOR urges crackdown as 54% of cigarette brands flout tobacco laws

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LAHORE:

The Institute for Public Opinion and Research (IPOR) released its research report today during a press briefing in Lahore. The report sheds light on the alarming rise in the illicit cigarette trade across Pakistan and the gaps in enforcing existing tobacco control laws.

During the briefing, IPOR Executive Director, Tariq Junaid revealed that more than 54% of cigarette brands available in the market are in blatant violation of national laws, particularly the Track and Trace System (TTS) and Graphical Health Warnings (GHWs). He highlighted that despite the implementation of GHWs in 2009 and TTS in 2022, enforcement has been practically non-existent, creating space for the illegal trade to thrive. Cigarette packs without health warnings and without TTS stamps are openly being sold in the market.

He pointed out that although legislation introduced in 2019 mandated that 60% of each cigarette pack must display a graphical health warning, six years later, 286 brands are still openly sold without any health warnings. This, he noted, is a clear breach of the law. Junaid added that, much like in other areas, the Track and Trace System appears to have failed in curbing these violations.

According to the report, a survey was conducted across 1,520 retail outlets in 19 districts, identifying 413 different cigarette brands being sold. Alarmingly, only 19 brands were found to be compliant with TTS requirements while 394 brands were found without stamps.

The vast majority lacked tax stamps and the legally mandated health warnings. Moreover, 332 brands were being sold below the legal minimum price of Rs162.25, with some priced as low as Rs40 — posing not just a regulatory challenge but also causing significant loss to government revenue.

The report further disclosed that 55% of illicit cigarettes are produced locally without paying taxes, while 45% are smuggled from abroad. This unchecked illegal trade is causing an estimated annual loss of over Rs300 billion to the national treasury.

During the session, Junaid also responded to questions related to tobacco sector regulations. He stressed that each time the government increases tobacco taxes, illegal cigarette sellers are the primary beneficiaries, as the lack of enforcement drives consumers toward cheaper, illicit tax-evading alternatives.

He urged the government to take immediate and decisive action by enhancing monitoring of retail outlets nationwide, ensuring full compliance with TTS and GHWs by all manufacturers, and launching a coordinated national crackdown on the illegal cigarette trade. These actions, he stated, are critical not just for ensuring legal accountability but also for safeguarding state revenue and maintaining fair business competition.

Junaid warned that this is not merely a regulatory shortfall, but a serious economic and legal crisis that demands urgent, integrated, and effective government intervention.