Fawad Khan, spokesperson for Mustehkam Pakistan, has urged the government to act swiftly and decisively against illegal trade to enhance revenue and lessen the tax burden on ordinary citizens. He expressed alarm over the continued presence of illegal items in the market, nearly six weeks after the budget was announced.
Khan stressed the detrimental effects of illegal trade on Pakistan’s economy and its vulnerable communities. He warned that without broadening the tax base and implementing a robust track and trace system along with effective anti-illegal trade policies, the government will struggle to meet its tax-to-GDP ratio target of 13%. A recent report from an international research institute revealed that Pakistan loses approximately 1 trillion rupees annually due to tax evasion in major sectors including real estate, pharmaceuticals, tyres and lubricants, tea, and cigarettes.
Fawad highlighted that the illegal cigarette trade alone results in an annual loss exceeding 310 billion rupees to the national treasury, with losses expected to rise this year. He cautioned that if all cigarette brands are not brought under digital monitoring, illegal trade could soar to 65% this year, further harming the legitimate industry and complicating the government’s efforts.
The Director General of Inter-Services Public Relations (DG ISPR) recently indicated that 50-60% of cigarettes in Pakistan are sold illegally, leading to substantial economic losses. Former Prime Minister Shahid Khaqan Abbasi also noted that billions of rupees are lost due to illegal cigarette sales, attributing the problem to weak government enforcement.
Fawad Khan underscored the urgency of effective track and trace system implementation to avoid missing the tax revenue target for the fiscal year 2024-25. Failure to address these issues could force the government to increase borrowing, exacerbating economic imbalances and debt. By cracking down on illegal trade, the government can boost revenue, support legitimate businesses, and relieve financial pressure on ordinary citizens, fostering a more balanced and sustainable economy.