The illicit tobacco trade is a contentious issue in Pakistan, with the government concerned about lost revenue due to tax evasion and the industry arguing that high taxes lead to increased illicit due to lax tax administration. This debate has recently intensified, with the industry propagating that the tax hike in February 2023 has significantly fueled illicit trade. The industry claims that illicit trade of cigarettes increased to 60 percent in southern Punjab. However, a recent WHO study found that the illicit trade in Islamabad is around 23.1%, suggesting that the industry’s claims are exaggerated.
Social Policy and Development Centre (SPDC) conducted a nationwide survey of over 5,000 smokers between October and December 2023. Using this survey data, this research brief summarizes estimated indicators of the illicit trade of cigarettes in Pakistan. SPDC conducted a similar survey in 2021-22, allowing comparisons where applicable.
