Pakistan is grappling with a rise in illegal cigarette sales, which now account for over 50% of the market, leading to an annual tax revenue loss of Rs.300 billion, according to market sources.
The sale of legal cigarettes has seen a sharp decline, with an 80 crore stick drop in the first quarter of the fiscal year alone, as volumes decreased from 7.1 billion sticks in July-September last year to 6.3 billion this year.
The downturn has also impacted major brands, with the annual sales of one Tier 1 brand plummeting from 66 crore sticks to 30 crore. Market insiders fear a further drop of Rs.4 billion in legal cigarette sales by year-end.
Pakistan missed a $20 million export opportunity to Sudan, as a crucial order was canceled due to delays in government decision-making.
Experts suggest that empowering provinces to act against smuggled cigarettes could help curb illegal sales and recoup lost revenue.
