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In a recent statement, Mustehkam Pakistan, an advocacy group focused on combating illicit trade and tax evasion, called for immediate government intervention to address the rampant issue of illegal trade in Pakistan. The organization warns that failure to act could jeopardize the country’s tax collection goals.
Fawad Khan, spokesperson for Mustehkam Pakistan, expressed concern over the prevalence of illicit goods in the market nearly six weeks after the budget announcement. “The government must take decisive steps against illicit trade to boost revenue and ease the tax burden on ordinary citizens,” Khan stated.
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According to a foreign research institute, Pakistan loses approximately 1 trillion rupees annually due to tax evasion across major sectors, including real estate, pharmaceuticals, tyres, lubricants, tea, and cigarettes. The illegal cigarette trade alone costs the national exchequer over 310 billion rupees each year, with projections indicating this figure could rise.
Khan cautioned that without expanding the tax base and implementing effective monitoring systems, the government would struggle to achieve its target tax-to-GDP ratio of 13%. He emphasized the urgent need for a comprehensive track and trace system, warning that the volume of illegal cigarette trade could reach 65% this year if left unchecked.
Recent statements from high-ranking officials support these concerns. The Director General of Inter-Services Public Relations (ISPR) reported that 50-60% of cigarettes in Pakistan are sold illegally, resulting in billions of rupees in economic losses. Former Prime Minister Shahid Khaqan Abbasi also highlighted the government’s weakness in collecting taxes from illegal cigarette manufacturers.
Mustehkam Pakistan stressed that failure to effectively implement the track and trace system could lead to missed tax targets for the 2024-25 financial year. This shortfall might force the government to increase borrowing, potentially exacerbating economic imbalances and the national debt burden.
As Pakistan grapples with these challenges, the call for swift and effective action against illicit trade grows louder, with stakeholders emphasizing the critical role of robust tax collection in the country’s economic stability.
