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ISLAMABAD, Aug 05 (APP):Chairman of the Fair Trade in Tobacco (FTT), Muhammad Ameen on Tuesday called on the government to escalate and institutionalize its efforts against the illicit tobacco market, which he described as a “parallel economy” undermining the country’s fiscal health and lawful businesses.
“Pakistan is suffering from a parallel economy run by illegal cigarette manufacturers and smugglers,” said Ameen while addressing a press conference here.
“These mafias not only rob the state of tax revenue but also destroy the livelihoods of thousands of legitimate farmers and traders who follow the law.”
While acknowledging recent government measures—such as deploying Frontier Corps (FC) personnel at Green Leaf Threshing (GLT) units and rolling out a Track and Trace System—Ameen stressed that these efforts must be expanded and enforced systematically across the supply chain.
According to Federal Board of Revenue (FBR) data, legal cigarette sales dropped from 36 billion sticks in 2023 to 33 billion in 2024—an 8.3% decline.
Meanwhile, a study by Oxford Economics found that illegal cigarettes now account for a staggering 46 billion out of the 79 billion sticks sold in Pakistan, giving the black market an estimated 58% share—the highest in the region.
“This means the illegal sector now controls nearly 58% of the market,” Ameen said. “In comparison, India’s illicit trade accounts for 25%, Bangladesh’s for 20%, and Iran’s for 30%—we are the worst-hit in South Asia.”
The legal tobacco industry contributed over Rs. 200 billion in taxes last fiscal year, including federal excise duty and sales tax. However, experts estimate the sector’s total tax potential at Rs. 550–600 billion annually. The difference—approximately Rs. 400 billion—is more than Pakistan’s combined federal budget for education and healthcare, Ameen noted.
Much of the illegal trade stems from 286 known smuggled brands that dominate the market by evading taxes and regulatory oversight. “These smuggled cigarettes are cheaper, widely available, and completely unregulated, putting public health and our economy at risk,” Ameen explained.
He argued that Pakistan’s high excise tax—48% for low-tier and 68% for high-tier brands—has unintentionally pushed consumers toward these untaxed alternatives.
“Let’s be clear: the problem is not tobacco, it’s tax evasion,” he asserted. “We need targeted enforcement, not blanket overregulation that ends up hurting legal industry stakeholders while giving free rein to smugglers.”
Ameen urged the government to shift from reactive crackdowns to long-term structural reforms. “We must move from reaction to regulation, from raids to reforms,” he said. “The illegal cigarette mafia must be dismantled—at manufacturing units, along supply chains, at border points, and on retail shelves.”
He also called for stronger inter-agency coordination between the FBR, Ministry of Finance, and law enforcement agencies. “This is not just about revenue. This is about fairness, justice, and the rule of law,” Ameen emphasized.
Offering support from the FTT, he said the organization is ready to assist in policy reform, data transparency, and transitioning support for farmers—key steps toward creating a more sustainable and balanced tobacco control framework in Pakistan.
As the legal industry reels under pressure and public funds continue to leak, experts say the government’s ability to counter this massive illegal trade could have a lasting impact on Pakistan’s economy, governance, and public health priorities.