Action against illegal cigarettes to strengthen revenue & investors confidence: ACT Alliance Pakistan

 

Islamabad: Mubashir Akram, Country Director, ACT Alliance Pakistan, has appreciated the Government of Pakistan, Prime Minister Muhammad Shehbaz Sharif, and the Federal Board of Revenue for continuing enforcement against the illegal tobacco industry, saying that firm and consistent action against tax evasion is essential for protecting Pakistan’s revenue base, formal businesses, and investor confidence.

In a statement, Mubashir Akram said that the government’s recent enforcement posture against illegal cigarette manufacturing, non-duty-paid products, smuggled brands, and violations of the Track and Trace System reflects a much-needed seriousness in defending the documented economy.

“The illegal tobacco industry steals more than Rs. 300 billion from Pakistan’s tax revenue every year. The actual size of the illegal cigarette trade may be three to four times larger than the tax theft itself because the business includes manufacturing, transport, warehousing, wholesale distribution, retail sales, cash circulation, and protection networks,” Akram said.

He said Pakistan cannot afford to treat illegal cigarettes as a routine market violation. “This is organized economic sabotage. Every illegal cigarette pack sold without tax damages the national exchequer, weakens legal businesses, and undermines the credibility of the state’s enforcement system,” he said.

Akram said ACT Alliance Pakistan fully recognizes the importance of the government’s recent actions and believes these efforts must be sustained without interruption.

“The Prime Minister and the FBR deserve appreciation for pushing enforcement in a difficult market where illegal operators have enjoyed space for far too long. The challenge now is continuity. Enforcement must not come in waves. It must become a permanent discipline of the state,” he said.

He added that enforcement against the illegal tobacco industry should be seen as part of a much broader national effort against all forms of illegal economy, including smuggling, counterfeiting, under-invoicing, non-duty-paid goods, and tax evasion in major sectors.

According to Akram, consistent action across the illegal economy can add enormous value to Pakistan’s fiscal position.

“If Pakistan keeps pressure on illegal businesses across sectors, the country can recover very large sums in tax revenue over time. This can add tens of billions of dollars to national tax income, improve documentation, and increase the circulation of lawful capital in the market,” Akram said.

“Money that currently moves through illegal and undocumented channels must return to the formal economy, where it can support investment, employment, taxation, and growth.”

He said the enforcement campaign is also directly linked to Pakistan’s ability to attract domestic and foreign investment. As the world’s fifth-largest country by population, Pakistan offers a major consumer market, a young labor force, and broad business opportunities. However, investors look beyond population size.

They also study whether the state can enforce rules, protect compliant businesses, and prevent illegal operators from capturing market share.

“Domestic and foreign investors are watching whether Pakistan rewards legality or allows illegality to dominate. If the state protects tax-paying businesses, investors will see Pakistan as a serious market. If illegal operators can use pressure to block enforcement, investors will read that as a warning,” Akram said.

He expressed concern over media reports that those involved in the illegal cigarette trade may attempt to use political, administrative, or other forms of influence against FBR officials and law enforcement agencies to stall or halt enforcement operations.

“This would be extremely damaging. If illegal cigarette operators succeed in pressuring the system, it will weaken the standing of the government and damage Pakistan’s reputation before those responsible for bringing foreign direct investment into the country,” Akram said.

“No investor wants to enter a market where tax evaders can challenge enforcement through influence. That would be viewed as erosion of the state’s authority against the illegal economy.”

Akram urged the government to protect FBR officers, Customs teams, Inland Revenue officials, and other enforcement personnel from pressure and intimidation. He said officials acting against illegal businesses are not merely conducting raids, they are defending Pakistan’s economic sovereignty.

“These officers are standing between Pakistan’s tax base and the illegal cigarette mafia. They should receive full institutional backing, political support, and public recognition,” he said.

ACT Alliance Pakistan called for continued action against illegal cigarette factories, undeclared tobacco processing, non-TTS products, smuggled cigarette brands, illegal warehouses, and retail outlets selling non-duty-paid products. It also urged stronger coordination among FBR, Pakistan Customs, Inland Revenue, provincial administrations, police, Rangers, and district authorities.

“Pakistan loses trillions of rupees every year because of the illegal economy. The cigarette sector alone shows how damaging this problem has become. The government must not step back. It must move forward with greater force, better coordination, and complete resolve,” Akram said.

He concluded by saying that Pakistan’s message to investors must be clear. “The state stands with legal business, not with tax evaders. Compliance will be protected. Illegal trade will be punished. That is the only way Pakistan can strengthen revenue, rebuild confidence, and unlock its true economic potential.”