POLICY BRIEF - The Extent of Illicit Trade of Cigarettes in Pakistan

POLICY BRIEF The Extent of Illicit Trade Social Policy and Development Centre June 2024 of Cigarettes in Pakistan INTRODUCTION The illicit tobacco trade is a contentious issue in Pakistan, with the government concerned about lost KEY MESSAGES revenue due to tax evasion and the industry arguing that high taxes lead to increased illicit due to lax tax • The extent of illicit trade of administration. [...] The installation of the Track and Trace System (TTS) has now addressed this issue to a - Interviewees’ responses: The brand used and certain extent, but the system has only recently been price paid by the respondent introduced and not all cigarette companies are covered yet. [...] SPDC Policy Brief 2 Warnings Packs sold below the minimum price Figure 4: The extent of illicit trade, (%) Overall, the stated per pack price of 12 percent of smokers was below the minimum price notified by 37 the government – Rs 127 per pack of 20 cigarettes. [...] After eliminating the Figure 5: Stamps found on cigarette packs, (%) overlapping effect, a composite indicator of the illicit trade was estimated, which determines that the purchased pack is illicit due to either of the two 55 features. [...] SPDC Policy Brief 3 Sale of loose cigarettes CONCLUSION AND POLICY IMPLICATIONS The sale of loose cigarettes is prohibited by law but is The illicit cigarette trade in Pakistan is evident, but very commonly practiced by retailers and consumers its prevalence is much lower than the claims made in the country.