Pakistan Emerges as the Global Leader in Illicit Cigarette Trade: Insightful Report
Synopsis
A striking report indicates that Pakistan is the largest market for illicit cigarettes globally, with a staggering 55% prevalence. Despite government efforts, the challenge remains significant as legal cigarette consumption stagnates. Discover the implications of this alarming trend and the factors driving the shift towards illegal brands.
Key Takeaways
Pakistan has the highest global market share of illicit cigarettes at 55%.
Efforts by the Federal Board of Revenue (FBR) are ongoing but face significant challenges.
Higher taxes have not successfully decreased cigarette consumption.
Illicit cigarette consumption is driven by affordability issues with legal brands.
The price gap between legal and illicit products has widened significantly due to tax hikes.
New Delhi, April 18 (NationPress) A recent report reveals that Pakistan holds the title for the largest market of illicit cigarettes globally. Simon Trussler, who serves as the Head of International Trade and Fiscal Affairs at British American Tobacco (BAT), made this assertion. He noted that the prevalence of illicit cigarettes in Pakistan has soared to 55%, indicating a significant evasion of domestic taxes, as reported by Business Recorder.
The Federal Board of Revenue (FBR) is fully aware of this pressing issue and is actively working to address it; however, it remains a substantial challenge, Trussler emphasized.
According to a recent study conducted by Oxford Economics, Pakistan's fiscal policy regarding cigarettes has failed to meet its goals—both in terms of tax revenue and in curbing overall cigarette consumption.
Trussler pointed out that despite the imposition of higher cigarette taxes, there has been no notable reduction in the total consumption of cigarettes across Pakistan.
He revealed that cigarette consumption has generally remained stable at approximately 80 billion sticks since 2012, while the market has sharply shifted towards illicit brands following significant tax increases.
The surge in illicit cigarette consumption has been fueled by a mix of demand and supply factors, he explained.
Furthermore, the company has urged the government to refrain from increasing the Federal Excise Duty (FED) on cigarettes in the upcoming budget for 2026-27, as consumers are struggling to cope with the current excise burden.
The rapid rise in illicit cigarette consumption is largely attributed to a recent decline in the affordability of legal, tax-compliant brands.
Trussler explained that the tax hikes have resulted in a widening price gap between legal and illicit cigarettes, with over 80% of the price increases in Pakistan directly linked to these tax hikes.
According to data from the WHO, in 2024, the pre-tax price of cigarettes in Pakistan ranked as the 173rd lowest worldwide, costing less than 20% of the global average.
This situation has created a strong incentive for local manufacturers to operate outside the law, evading local taxes and obtaining a higher profit margin, the report concluded.
Point of View
It is crucial to highlight the alarming statistics surrounding illicit cigarette trade in Pakistan. This issue not only affects government revenues but also public health. The government must adopt effective strategies to counteract this growing challenge, ensuring that tax policies align with intended outcomes.
NationPress
1 May 2026
Frequently Asked Questions
What percentage of cigarettes in Pakistan are illicit?
Currently, 55% of cigarettes consumed in Pakistan are illicit.
Who reported that Pakistan is the largest market for illicit cigarettes?
The report was presented by Simon Trussler, Head of International Trade and Fiscal Affairs at British American Tobacco (BAT).
What has been the impact of tax hikes on cigarette consumption in Pakistan?
Despite tax hikes, the overall cigarette consumption has remained stable, with a noticeable shift towards illicit brands.
What is the FBR doing about the issue of illicit cigarettes?
The Federal Board of Revenue (FBR) is aware of the issue and is actively working on solutions to address it.
How has the price gap between legal and illicit cigarettes affected the market?
The tax increases have widened the price gap, making illicit cigarettes more attractive to consumers.
