ACT Alliance backs FBR action against illicit tobacco

ISLAMABAD: (Web Desk) – ACT Alliance Pakistan has expressed support for the Federal Board of Revenue’s recent crackdown on illegal tobacco activities, including smuggling, untaxed cigarette production, and violations of the Track and Trace System. The organization believes these enforcement measures could generate around 50 billion rupees in additional revenue during the current fiscal year.

According to Country Director Mubashir Akram, the real challenge in Pakistan’s cigarette sector is not simply taxation on legal products, but the rapidly growing illegal market that continues to evade duties and weaken government revenue collection.

He criticized several NGOs, alleging that they disproportionately focus on increasing taxes on legal manufacturers while ignoring widespread illicit trade, under-invoicing, and non-duty-paid cigarette circulation in the market.

Akram argued that some NGO reports underestimate the size of the illegal cigarette economy, claiming it is significantly larger than officially stated figures. Even their lower estimates, he said, translate into massive annual tax losses for the state.

He further stated that while total cigarette consumption in Pakistan remains stable, legal sales have sharply declined, suggesting that demand has shifted from the regulated sector to illegal and untaxed channels.

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The ACT Alliance also claimed that different independent assessments place annual tax leakage from illicit cigarettes between hundreds of billions of rupees, with some estimates exceeding 400 billion rupees in losses.

Akram rejected the idea that increasing taxes alone can improve revenue collection, arguing that weak enforcement allows illegal operators to benefit while the formal industry bears the burden of higher duties.

He also questioned the effectiveness of the Track and Trace System, saying field data suggests widespread non-compliance, including underpriced products and unregistered brands still circulating in retail markets.

The organization further raised concerns over what it described as selective advocacy by NGOs, asking why illegal manufacturers and smuggling networks receive less attention compared to legal companies.

ACT Alliance emphasized that it supports regulatory compliance and lawful enforcement but opposes what it calls biased policy lobbying that ignores the scale of illicit trade.

It urged the government to prioritize enforcement against illegal manufacturing, strengthen tax collection systems, and ensure that policy decisions are based on economic evidence rather than pressure-driven narratives.

The statement concluded that Pakistan must protect its legitimate tax-paying industry while systematically dismantling illegal tobacco networks that undermine national revenue.