Fawad Khan, spokesperson for Mustehkam Pakistan, has called for urgent and decisive measures from the government to combat illegal trade, which he argues is crucial for increasing revenue and alleviating the tax burden on ordinary citizens. Despite the recent budget announcement, illegal items continue to flood the market, raising concerns about their detrimental impact on the economy and vulnerable communities.
Khan highlighted the pressing need for expanding the tax base and instituting a comprehensive track-and-trace system to counteract illegal trade. Without these measures, he warned, the government may struggle to achieve its tax-to-GDP ratio target of 13%.
A recent report from a foreign research institute estimates that Pakistan loses about 1 trillion rupees annually due to tax evasion across key sectors including real estate, pharmaceuticals, tyres, lubricants, tea, and cigarettes. Of particular concern is the illegal cigarette trade, which alone is responsible for an annual revenue loss of over 310 billion rupees, with this figure expected to rise further. Khan noted that without comprehensive digital monitoring of all cigarette brands, illegal trade could account for up to 65% of the market this year, exacerbating challenges for legitimate businesses and the government.
The issue has been corroborated by the Director General of Inter-Services Public Relations (DG ISPR), who reported that 50-60% of cigarettes in Pakistan are sold illegally, resulting in significant economic losses. Former Prime Minister Shahid Khaqan Abbasi also underscored the billions lost to illegal cigarette sales, criticizing the government’s inability to effectively tax these illicit operations.
Khan stressed that if the government does not successfully implement the track-and-trace system this time, meeting the tax revenue target for the 2024-25 fiscal year will be exceedingly difficult. This shortfall could force the government to increase borrowing, further destabilizing the economy and exacerbating the national debt.
Taking robust action against illegal trade, Khan argued, will not only enhance revenue collection and support legitimate businesses but also ease the financial strain on ordinary citizens, fostering a more balanced and sustainable economic environment.