WHO's stepped up higher tax drive may fuel illicit cigarette trade
LAHORE: As the World Health Organisation (WHO) intensified its global drive for greater tobacco taxes, there are growing concerns in Pakistan that the strategy may have the opposite impact.
While intended to reduce smoking, the WHO's tax-centric approach is exacerbating an already rampant illicit cigarette trade, harming legitimate businesses, depleting public cash, and undermining regulatory integrity, experts of the industry said.
Pakistan has become a case study of unforeseen effects. Despite heavy taxation in accordance with WHO recommendations, the market has seen a noticeable shift toward illicit cigarette consumption, they said.
It may be added that legal tobacco companies now control less than half of the market, although accounting for roughly 98% of the industry's tax revenue. Untaxed and unregulated brands have invaded retail
shelves across the country, often selling for
less than the legal minimum price and without tax stamps.
'The illicit cigarette trade has now overtaken the legitimate sector, comprising 58% of the total market. Pakistan's annual consumption is around 82 billion sticks, yet only 34 billion are taxed, down sharply from 67 billion a decade ago,' said Asad Shah, Director at Pakistan Tobacco Company (PTC).
Shah noted that tax revenue potential from the sector stands at around PKR 570 billion annually, but actual collection reached just PKR 292 billion in FY 2023–24 and only PKR 223 billion in the first 11 months of the current fiscal year.
Although the WHO acknowledges illicit trade as a challenge, its policy guidance continues to emphasize taxation over enforcement.
'It's burdening compliant manufacturers while failing to curtail illicit and smuggled brands,' Shah added.
Experts said that public health objectives must be pursued alongside strong enforcement mechanisms, not only tax increases. Without this balance, the policy risks facilitating tax evasion, undermining investor confidence, and eroding public trust in the regulatory system.
Copyright Business Recorder, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
9 hours ago
- Express Tribune
$18.7m pandemic response launched
Pakistan has launched the implementation of a $18.7 million project under the pandemic fund to strengthen its pandemic preparedness and response systems. Supported by the World Health Organization (WHO), the Food and Agriculture Organization (FAO), and the Asian Development Bank (ADB), the initiative will establish "One Health Units" across the country through a coordinated approach linking human, animal, and environmental health sectors. Led by the Ministry of National Health Services, Regulations and Coordination and supported by the National Institute of Health (NIH), the initiative emphasises the urgent need for integrated action across human, animal, and environmental health systems. The launch event, held in Islamabad, brought together over 70 stakeholders, including senior government officials from the ministries of health, food security, and climate change, as well as representatives from provincial authorities and development partners. "The pandemic fund presents a critical opportunity for countries like Pakistan to bolster their national health security. The integration of the One Health approach will enable us to build resilient systems that can detect and respond to complex health threats, including zoonotic spillovers and antimicrobial resistance," said Dr Shabana Saleem, Director General of Health. Pakistan's strategy aligns with the National Action Plan for Health Security (NAPHS) and the International Health Regulations (IHR), prioritizing the One Health approach to address the fact that over 75% of emerging infectious diseases in humans originate from animals — risks further exacerbated by climate change and growing antimicrobial resistance. The One Health Units will strengthen coordinated disease surveillance, early warning systems, cross-sectoral data sharing, laboratory capacity, and workforce training. These units will be embedded within existing government systems and guided by clear mandates and governance frameworks. "The pandemic fund allows us to move from planning to action, from commitment to coordination," said Florence Rolle, FAO Representative in Pakistan. "It provides a chance to operationalize long-standing goals for zoonotic disease control, food safety, and antimicrobial resistance management." Dr Dapeng Luo, WHO Representative in Pakistan, emphasized the urgency of the effort: "The Covid pandemic was a stark reminder that building stronger health systems is no longer optional. The WHO is committed to working alongside Pakistan and its partners to save lives when the next health threat emerges." In addition to the $18.7 million from the Pandemic Fund, the initiative has mobilized $4.1 million in co-financing and $49.7 million in co-investment, underscoring strong national and international commitment to building a safer, healthier future.
Business Recorder
12 hours ago
- Business Recorder
Copper slips from three-month peak on Chinese data
LONDON: Copper prices slipped on Friday from a three-month peak after weak data in top metals consumer China and some profit-taking, but losses were modest due to underlying tightness and buoyant premiums. London Metal Exchange benchmark three-month copper fell 0.5% to $9,850.50 per metric ton by 1430 GMT, having hit $9,917, its highest since March 27. It was up 2.2% for the week. Data showed that China's industrial profits swung back into sharp decline in May from a year earlier, as factory activity slowed. 'Falling industrial profits is not a good sign for the industrial sector in general, but it's not a straight line translation to lower copper demand,' said Nitesh Shah, commodity strategist at WisdomTree. 'What we see is that the copper-intensive stories are probably still very much in full force at the moment.' Spending by China on its power grid, for example, has been strong, Shah added. It hit a record last year and was up 19% in the first five months of 2025, Citi said in a note. Copper on the Shanghai Futures Exchange rose 1.5% to 79,920 yuan ($11,148.93), having hit 80,060 yuan, its highest since March 31. It was up 2% for the week. Expectations that the United States will impose tariffs on copper imports have pulled metal to that country, leaving shortages elsewhere. Data on Friday showed that inventories in warehouses monitored by ShFE slid 19% from the previous week to 81,550 tons, down 70% over the past four months. LME copper stocks have tumbled 66% in the same period, sending premiums for nearby contracts soaring. The premium for the LME cash copper contract over the three-month contract retreated on Friday to $207 a ton from $320 a ton on Thursday, its highest since November 2021. US Comex copper futures fell 1.4% to $5.05 a lb, bringing the premium of Comex over LME copper to $1,286 a ton, slightly weaker than on Thursday. Among other metals, LME aluminium added 0.2% to $2,589.50 a ton and nickel gained 0.4% to $15,265 while zinc land lead were little changed at $2,767 and $2,039 respectively, and tin fell 0.6% to $33,560.
Business Recorder
12 hours ago
- Business Recorder
Business community leader expresses his views on budget
KARACHI: Convener of the FPCCI Central Standing Committee on Hardware Merchants, Nadeem Ahmed Kushtiwala, stated that peace in the region is vital for Pakistan to increase its share in global trade. He emphasized that the government should have incorporated suggestions from the business community in the federal budget to enhance exports, keep the wheels of industry running, and avoid entrusting local trade entirely to the grip of FBR officials. This, he said, would ensure business growth, higher tax revenues for the FBR, and enable the government to meet its revenue targets. He expressed these views while addressing the fourth meeting of the Central Standing Committee on Hardware Merchants held at the Federation House. The meeting was also attended by Deputy Convener Shaukat Ismail, Tariq Rasheed, Tariq Younus, Hamza Nisar, and Faizan Nasir. Kushtiwala pointed out that the budget lacks any notable tax incentives or facilitation plans for persons with disabilities, special individuals, and senior citizens. He further remarked that no projects or initiatives have been proposed for the development of key sectors such as agriculture, industry, manufacturing, and ports/shipping/logistics, the maritime economy, and exports. He criticized the absence of measures to address the ongoing brain drain, which is significantly harming the country, as nearly 90% of professionally educated individuals are migrating abroad. Kushtiwala also noted that the budget does not increase allocations for essential public services such as education, healthcare, and access to clean drinking water, which are crucial for improving the general quality of life. During the meeting, it was highlighted that no changes have been made to the Valuation Department's ruling system. The high valuation rulings on a wide range of HS Code items are driving up landed costs, severely affecting the export sector; particularly the textile and apparel industries in competing in the international market. Copyright Business Recorder, 2025
