Illicit Tobacco Trade May Cost Pakistan $1 Billion
Illegal tobacco trade is creating a big financial problem across Asia-Pacific. It is stopping governments from collecting billions of dollars in possible revenue and hurting legal, tax-paying businesses.
Pakistan Faces Around $1 Billion Loss
A report called 'Illicit Tobacco Trade in Asia-Pacific: Taxation, Market Incentives, and Macroeconomic Costs' says the illegal trade causes about $14.85 billion in yearly revenue loss across the countries studied. Pakistan alone faces around $1 billion in estimated yearly revenue loss.
Illegal Market Share in Pakistan
The study estimates that 54% of Pakistan's tobacco market is illegal. The lost revenue is equal to 117.4% of the tobacco tax collected.
Signs of Improvement in FY2025-26
There are some positive signs. In FY2025-26, the legal cigarette market grew from 36.5 billion sticks to 41.5 billion sticks. This shows a shift of about 5 billion sticks toward the legal market.
Media reports say tax revenue also increased from Rs284 billion to Rs329 billion during the same period.
Reasons Behind the Change
The improvement in legal sales, tax revenue, and lower illegal market share happened at the same time as stronger enforcement and new laws.
Potential Revenue from Legal Market
Industry estimates show that every one billion sticks moving into the legal sector could bring around Rs7 billion in possible government revenue.
