Islamabad, March 25: Pakistan needs a sustained, year-round enforcement framework to address illegal trade in the tobacco sector, which has emerged as a major component of the country’s shadow economy, a senior official of ACT Alliance Pakistan said.
Speaking at a webinar hosted by students of a business school in Islamabad, Country Director Mubashir Akram said the issue extends beyond revenue loss and poses broader risks to governance, lawful business activity and policy effectiveness.
Illegal trade and revenue impact
Akram said estimates place annual tax evasion in the tobacco sector at around Rs400 billion, adding that the actual scale may be higher when accounting for undeclared production, supply chains and retail distribution.
He noted that the presence of non-compliant products in the market reflects structural weaknesses in enforcement and regulatory oversight.
Need for consistent enforcement
While acknowledging recent government actions, including seizures of non-duty-paid tobacco and monitoring efforts, Akram said these steps need to be institutionalised.
He said enforcement should not rely on periodic crackdowns but must operate continuously to limit illegal supply chains and ensure compliance across the market.
Policy and institutional challenges
Akram highlighted that raising taxes without controlling illegal trade could shift consumer demand toward untaxed products. He stressed the importance of strengthening track-and-trace systems, improving coordination among enforcement agencies and ensuring consistent implementation of regulations.
Role of academia and stakeholders
He called on academic institutions to contribute research and analysis on the illegal economy, describing it as a critical but underexplored area. He also emphasised the role of civil society and media in raising awareness and maintaining oversight.
Akram said addressing the issue requires coordinated efforts across institutions, combining enforcement, research and public engagement.
Long-term strategy
He concluded that Pakistan should adopt a structural approach focused on retail compliance, input regulation and institutional accountability to reduce illegal trade.
According to Akram, strengthening enforcement mechanisms is essential for protecting the formal economy and improving confidence in governance systems.
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