ISLAMABAD: Pakistan’s cigarette industry is evading Rs325 billion in taxes annually, revealed the Pakistan Tobacco Company (PTC) in a pre-budget briefing.
PTC Director Asad Shah stated that illegal cigarettes now dominate 58% of the market. While the industry produces 82 billion cigarettes yearly, taxes are only collected on 34 billion sticks – leaving 46 billion untaxed.
Shah highlighted the tax burden on legal products: A Rs483 pack of Tyrone cigarettes includes Rs409 in taxes. Despite legal brands holding just 42% market share, they contribute 98% of sector tax revenue.
Tax collection has sharply declined – from taxes on 67 billion sticks 12 years ago to just 34 billion today. This fiscal year (2023-24), Rs223 billion was collected in 11 months, falling Rs50 billion short of projections.
Smuggled and counterfeit cigarettes sell below the legal minimum price of Rs162.75 per pack, fueling tax evasion. Shah estimated proper enforcement could generate Rs570 billion annually.
