NUST Report Reveals Alarming Rise in Illicit Cigarette Trade

The current structure of excise duties on tobacco products in Pakistan has resulted in a concerning increase in the consumption of illegal tax-evaded cigarette brands. This has led to an estimated annual revenue loss of PKR310 billion for the government, as highlighted in a recent report by the National University of Sciences & Technology (NUST). The report reveals that over 60% of the tobacco market in Pakistan is now dominated by illicit cigarette brands.

During a ceremony attended by Federal Minister for Defence, Khawaja Muhammad Asif, and Dr. Rizwan Riaz from NUST, the challenges faced by the legitimate cigarette industry were discussed. Issues such as revenue collection, policy coordination, and market dynamics were emphasized. The report points out that inadequate enforcement of existing laws and regulations has further fueled the growth of the illicit cigarette trade.

Despite the implementation of the Track and Trace System (TTS) by the government to combat illicit trade, the report raises concerns about its effectiveness. Projections indicate a potential market share of over 60% for illicit brands by 2024, highlighting the urgency of the situation.

To tackle these challenges, the report recommends a comprehensive strategy involving reforms in the excise duty structure, price thresholds, and enhanced enforcement against non-compliant brands. Minister Asif stressed the importance of combining the Track and Trace system with robust retail-level enforcement to effectively combat illicit trade. The government's efforts in seizing billions of cigarette sticks worth of raw materials and shutting down counterfeiting factories were also acknowledged.

The rise of illegal cigarette trade in Pakistan poses a significant threat to government revenue and public health. Addressing this issue requires a multi-faceted approach, including policy reforms, enhanced enforcement measures, and regional cooperation. By taking decisive action against illicit trade, Pakistan can safeguard its economy and protect its citizens from the harmful effects of counterfeit tobacco products.