ISLAMABAD: ACT Alliance Pakistan has welcomed recent enforcement measures by the Federal Board of Revenue (FBR) against illegal tobacco trade, saying the actions highlight the scale of tax evasion and undocumented cigarette manufacturing in Pakistan’s tobacco sector.

The organisation said the crackdown on non-duty-paid cigarettes, illegal factories and violations of the Track and Trace System (TTS) could help increase tax revenue by around Rs50 billion during the current fiscal year. It also criticised what it described as a continued focus by some NGOs on raising taxes on the legal tobacco industry while giving limited attention to illicit cigarette markets.

In a statement, ACT Alliance Pakistan Country Director Mubashir Akram said the main challenge facing the tobacco sector was the growth of illegal cigarette manufacturing and smuggled products, which he said were reducing government revenues and shifting consumers away from documented businesses.

Akram questioned estimates presented by some NGOs regarding the size of the illicit cigarette market in Pakistan. He said broader market assessments indicated that illegal cigarette sales account for more than half of the country’s total cigarette market, while some public estimates place the figure closer to 35 percent.

According to ACT Alliance Pakistan, total cigarette consumption in the country has remained near 80 billion sticks annually, while legal sales have declined significantly in recent years. The organisation argued that the decrease in documented sales reflected a shift toward untaxed and unregulated products rather than a reduction in demand.

The statement also raised concerns about the implementation of the Track and Trace System, claiming that many cigarette brands available in retail markets remain non-compliant or are sold below the minimum legal price. ACT Alliance said enforcement against illegal factories, smuggling and retail violations should be strengthened alongside tax policy reforms.

Akram said sustainable tobacco tax policy should prioritise documentation of the market and recovery of the tax base before introducing additional tax increases. He called for coordinated action by the federal government, provincial administrations and enforcement agencies against illicit manufacturing, counterfeiting and non-compliant distribution networks.

The organisation said Pakistan’s tobacco policy debate should focus on enforcement capacity, revenue protection and regulation of undocumented trade within the sector.