Tobacco growers and traders in Pakistan called on the government to halt Federal Board of Revenue raids and reduce what they describe as unjust taxes during a convention held in Swabi yesterday (May 4). Participants alleged harassment during enforcement actions and demanded the withdrawal of law enforcement personnel from tobacco processing units, while also calling for interest-free loans and more supportive policies for farmers. Representatives from multiple political parties attended the gathering, where participants also discussed potential actions, including blocking a major motorway, to press their demands.
Tag: Pakistan
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Survey Says Pakistan’s Tobacco Control Not Working
A nationwide survey in Pakistan found widespread non-compliance in the cigarette market nearly four years after the introduction of the Track and Trace System. Conducted across 1,520 retail outlets in 19 districts, the study found that only 22 of the 477 identified brands in circulation were consistently compliant, with 455 failing to meet at least one regulatory requirement, including missing tax stamps, health warnings, or printed retail prices.
The survey also found that 392 brands were being sold below the government’s minimum price of PKR 162.25 ($0.58) per pack, with some as low as PKR 50 ($0.18), indicating a significant presence of untaxed and non-compliant products. Both smuggled and locally produced duty-unpaid cigarettes were widely available, with higher non-compliance rates in rural areas. The findings point to ongoing challenges in enforcement, monitoring, and market control, despite the formal rollout of digital tracking systems.
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Pakistan Investigating Undocumented Acetate Tow Issues
A sharp decline in documented imports of acetate tow has raised concerns about growing illicit supply channels and significant tax losses, according to the Business Recorder. Imports fell 53% between 2023 and 2025, dropping from 6.9 million kg to 3.7 million kg, despite stable cigarette production levels of 60–80 billion sticks annually. According to an unnamed industry expert, the gap suggests a substantial shift toward undocumented or smuggled inputs following the imposition of a PKR 44,000 ($158.40) per kg Federal Excise Duty.
Industry sources estimate that the trend has cost the government approximately Rs 300 billion ($1.1 billion) in lost tax revenue and distorted market competition. Legal manufacturers complying with import and tax requirements face increasing pressure as illicit operators expand market share, now accounting for more than half of total sales, Business Recorder said.
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BAT Calls Pakistan Largest Illicit Cigarette Market
British American Tobacco (BAT) says Pakistan has become the world’s largest illicit cigarette market, with illegal products accounting for roughly 55–58% of consumption. Simon Trussler, BAT’s Group Head of International Trade and Fiscal Affairs, said steep tax increases in recent years have widened the price gap between legal and illicit cigarettes—now around half the price—driving consumers toward untaxed products while overall consumption remains broadly unchanged at about 80 billion sticks annually.
BAT said higher taxes have failed to deliver expected revenue gains and instead have fueled domestic illicit production, which accounts for the majority of illegal supply. The company called for a more stable excise policy alongside sustained enforcement across the supply chain, noting recent seizures and factory closures as signs of increased government action.
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Pakistan Battling Illicit Cigarettes as Farmers Seek Balance
Pakistan is intensifying efforts to tackle distortions in its tobacco sector, combining a nationwide crackdown on illicit cigarettes with growing provincial demands for fiscal reforms. Finance Minister Bilal Azhar Kayani announced enforcement actions targeting illegal manufacturers and retailers, alongside track-and-trace systems and stronger tax oversight, noting the illicit market costs around Rs200 billion ($720 million) annually and now exceeds 50% of total consumption (43.5 billion sticks), with cheaper untaxed products undercutting legal sales.
At the same time, lawmakers in Khyber Pakhtunkhwa are pushing to tax the transport of locally grown tobacco to other regions, arguing the province — despite producing about 98% of Pakistan’s flue-cured Virginia tobacco — captures little value due to cigarette manufacturing being concentrated in tax-free zones elsewhere. Officials say the imbalance is fueling unemployment and farmer losses, underscoring calls for coordinated policy measures to restore fair taxation and economic returns across the supply chain.
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Pakistani Tobacco Growers Raise Tax, Pricing Concerns
A delegation from Pakistan’s Khyber Pakhtunkhwa Tobacco Action Committee met Faisal Karim Kundi in Islamabad to highlight challenges facing growers across Charsadda, Mardan, Swabi, Nowshera, Buner, and Mansehra, citing rising taxes and low tobacco prices. The group said current policies threaten livelihoods despite tobacco contributing more than Rs 3.25 billion ($11.7 million) annually to the provincial economy. The Governor voiced support for farmers and proposed forming a joint committee including growers, the Federal Board of Revenue, Customs, and the Pakistan Tobacco Board to address the issues through consultation.
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Weak Illicit Cigarette Enforcement Drains $1.1B in Pakistan
Pakistan is losing more than Rs300 billion ($1.1 billion) each year to the illegal cigarette trade due to weak enforcement against illicit manufacturing and smuggling, according to macroeconomic analyst Osama Siddiqui. He said effective action in the tobacco sector could significantly reduce the country’s widening revenue gap.
The shortfall comes as fiscal pressures mount. The Federal Board of Revenue missed its March target by Rs185 billion ($666 million), collecting Rs1,182 billion ($4.3 billion) against a goal of Rs1,367 billion ($4.9 billion) — just a 6% year-on-year increase versus the 21% growth required. Meanwhile, the government is trimming development spending to fund fuel relief, while facing pressure from the International Monetary Fund to withdraw tax exemptions.
Siddiqui argued that instead of raising taxes on already compliant sectors, authorities should prioritize curbing tax evasion in tobacco through stricter action against illegal production and smuggling, full implementation of track-and-trace systems, and tighter retail monitoring. He said plugging these leakages could create fiscal space for public relief and development spending at a time of heightened economic strain.
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Pakistan Arrests Two for ‘Procedural Violations’ in Selling Tobacco Machines
Two people were arrested in Swabi, Pakistan, after a raid by the Federal Board of Revenue over the alleged unlawful removal of tobacco manufacturing machinery, in a case that has drawn competing claims from authorities and industry representatives. Officials from RTO Peshawar say the action was taken under the Federal Excise Act, 2005, which requires prior excise approval before any cigarette production equipment is relocated, due to the risk that machinery could be used for untaxed manufacturing. An FIR was lodged following the raid, and two “owners,” along with an excise manager, were detained.
The company disputes the allegations, saying the machinery was surplus equipment legally sold on March 19 to a registered buyer, with Rs1.8 million ($6,480) paid in sales tax, and those arrested were employees, not owners. Management argues that the transaction complied with applicable rules and that excise officials acted unjustly, causing reputational harm. Industry figure Iqbal Khan Shewa also criticized the arrests, suggesting the action could negatively affect tobacco growers and associated livelihoods, while authorities maintain the case centers on procedural excise violations rather than the commercial sale itself.
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Pakistan Probes Theft of $900K of Cigarettes From FBR Warehouses
A Senate sub-committee in Pakistan called on relevant authorities to explain the theft of 2,828 cartons of cigarettes worth Rs250 million ($900,000) from Federal Board of Revenue (FBR) warehouses in Swabi and Mardan. Chaired by Senator Saifullah Abro, the panel directed the FBR and Federal Investigation Agency (FIA) to identify those responsible and ensure recovery of the stolen goods. The committee criticized the absence of senior FIA officials during proceedings and noted prior incidents of cigarette theft, including one in April 2024, raising concerns that consignments are being specifically targeted.
Officials reported that CCTV cameras were installed in all FBR godowns as of January 14, and a new SOP was introduced to strengthen monitoring. Ten officers have been suspended, while others with potential links to the business community were transferred. The panel also highlighted weak coordination between the FIA and Khyber Pakhtunkhwa Police, instructing authorities to implement stronger security measures and provide consolidated records of all godowns since 2012 to prevent future theft and smuggling activities.
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Pakistan Considering Vape Ban
In Pakistan, the Senate Standing Committee on National Health Services, Regulations and Coordination reviewed a private member’s bill this week aimed at banning vapes. The committee examined the Electronic Nicotine Delivery Systems (Regulation) Bill, 2025, discussing its provisions in detail. While members acknowledged the intent behind the legislation, the ministry highlighted objections from stakeholders and recommended a complete ban on the use of vapes, citing concerns that these devices could be misused to facilitate drug intoxication.