Different reports launched by international reputed research organizations in the last few years, highlighted the unprecedented growth in share of illicit cigarettes in Pakistani market.
According to a report by PWC 2021, illicit cigarettes market share is nearly 37.6 percent that is causing almost 78 billion of rupees loss to national exchequer.
IPSOS report regarding tax evasion in Pakistan in 5 major industries quoted that almost 40% market share has been captured by the illegal cigarettes mafia by violating minimum tax and minimum price criteria.
Shopkeepers in major markets of cities and towns across Pakistan are openly selling illegal cigarette packs with a price of around Rs15 to 35 which is far below than the minimum price of 20 cigarettes packs.
More than 200 local illicit cigarette brands are selling between Rs. 20 and Rs. 40 whereas the mandated minimum price is Rs 62.76 inclusive of a minimum tax per pack of Rs 42.12. These violations compromise the government’s fiscal objectives and the public health agenda.
In 2021, government promulgated a law regarding brand licensing that binds cigarette manufacturer’s to register their brand before launching that into the market. The law was introduced to discourage illegitimate brands from entering the market.
However the implementation of the law is very weak and still more than 150 unregistered brands belonging to local tobacco manufacturers are being openly sold in the market. Only 16 cigarette brands have applied for registration so far.
