Illicit tobacco trade to cause $1b revenue loss

A study cited by The Express Tribune estimates that illicit tobacco sales cost Pakistan about $1 billion in government revenue each year. Across the Asia-Pacific economies included in the research, the annual shortfall is put at $14.85 billion. The report also estimates that unlicensed products hold 54% of Pakistan’s tobacco market, with lost revenue equal to 117.4% of tobacco taxes collected.

There are signs of a shift towards legal sales: in FY2025-26, legitimate cigarette volumes rose from 36.5 billion to 41.5 billion sticks, a gain of 5 billion sticks. Media reports put tobacco tax receipts at Rs329 billion, up from Rs284 billion over the same period. The study links the improvement in legal volumes, tax receipts and illicit market share with tougher enforcement and legislative measures, and estimates that each billion sticks transferred to legal sellers could generate about Rs7 billion in government revenue.