Fawad Khan, spokesperson for Mustehkam Pakistan, has called on the government to act swiftly and decisively against illicit trade to boost revenue and alleviate the tax burden on ordinary citizens. Despite being nearly six weeks past the budget announcement, illegal goods continue to flood the market, he noted.
Khan stressed the urgency of expanding the tax base and implementing a comprehensive track and trace system to address tax evasion effectively. He warned that without these measures, achieving the target tax-to-GDP ratio of 13% will be a significant challenge.
According to a recent report from an international research institute, Pakistan loses about 1 trillion rupees annually due to tax evasion in various sectors such as real estate, pharmaceuticals, tyres and lubricants, tea, and cigarettes.
Khan highlighted that the illegal cigarette trade alone costs the national exchequer over 310 billion rupees each year, with the figure expected to rise this year. He cautioned that if all cigarette brands are not monitored digitally, illegal trade could surge to 65% this year, complicating matters for both the legitimate industry and the government.
The Director General of the Inter-Services Public Relations (DG ISPR) recently reported that 50-60% of cigarettes sold in Pakistan are illegal, resulting in billions of rupees in economic losses. Former Prime Minister Shahid Khaqan Abbasi also pointed out that the sale of illicit cigarettes leads to significant revenue losses and criticized government authorities for their inability to enforce tax collection from these illegal manufacturers.
Khan concluded by stressing that the government must implement the track and trace system effectively to meet the tax targets for the fiscal year 2024-25. Failure to do so may force the government to increase borrowing, exacerbating economic imbalances and adding to the national debt.