Minister of State for Finance and Revenue Ali Pervaiz Malik said the government plans to reduce the tax burden on salaried individuals and remove the tax on milk if the Federal Board of Revenue (FBR) successfully recovers between Rs300 billion and Rs350 billion in tax evasion from smuggled and non-duty-paid cigarettes.

Malik spoke during a roundtable on FBR’s Track and Trace System (TTS) compliance, where he shared that the prime minister has tasked the FBR with reducing income tax on the salaried class. Achieving this goal relies heavily on controlling the estimated Rs300-350 billion lost to illicit trade in the tobacco sector.

The event, hosted by the Institute of Public Opinion and Research (IPOR) in partnership with PILDAT, brought together government representatives, industry stakeholders, policy experts, and media to review IPOR’s latest study findings on compliance within the sector.

Malik, who chaired the session, reaffirmed the government’s commitment to enhancing compliance across all sectors through stricter regulations, highlighting that a stable economy requires collaborative efforts from all areas. He also underscored the importance of digitalisation and integrating technology to streamline processes and promote economic stability.

Since the TTS implementation began in 2021 for sectors like tobacco, cement, fertiliser, and sugar, the FBR has mandated TTS stamps on all cigarette packs, but full compliance remains challenging.

IPOR’s study, conducted in 11 cities across Punjab and Sindh, reviewed compliance at 720 retail outlets across 18 markets. The findings indicated that of 264 cigarette brands surveyed, only 19 were fully compliant with TTS requirements.

Non-compliant brands comprised 58% of the market, including both locally manufactured duty-not-paid (65%) and smuggled brands (35%), many of which lacked TTS stamps or violated minimum pricing and health warning requirements. Additionally, 197 brands were found selling below the Minimum Legal Price (MLP), while 48 non-compliant brands sold above it.

The roundtable facilitated discussions on TTS enforcement challenges at the retail level, tax implications of non-compliance, and public health impacts.

Muhammad Zaheer Qureshi, FBR’s project director for TTS, outlined enforcement progress and discussed challenges like industry compliance and technological adaptation. He also described FBR’s efforts to address these issues through tighter regulatory oversight.

The session closed with recommendations to enhance retail enforcement, raise penalties for violations, and launch public awareness campaigns, helping consumers understand the importance of buying compliant products.