Islamabad, Pakistan, September 15, 2026: Fair Trade in Tobacco (FTT) has called upon the Government of Pakistan and the Federal Board of Revenue to urgently review the reported estimate of approximately Rs. 40 billion in cigarette-sector tax evasion presented before a Senate committee, saying the figure does not appear to correspond with the size of Pakistan’s illegal cigarette market or with the government’s own previously reported revenue-loss estimates.
Speaking at a media event in Islamabad, Muhammad Amin, Chairman of Fair Trade in Tobacco, released an analytical report examining the reported Rs. 40 billion figure for the cigarette market, documented tax collections, illegal market share, and publicly available estimates from government institutions and independent researchers.
“The central question is very simple,” Amin said. “If the documented cigarette sector, representing roughly half of the market, contributes more than Rs. 300 billion in taxes, how can the other half of the market, operating largely outside the tax system, be responsible for only Rs. 40 billion in tax evasion? The arithmetic does not support that conclusion.”
The report noted that the tobacco sector generated approximately Rs. 329 billion in Federal Excise Duty and General Sales Tax during fiscal year 2025-26. The two largest documented cigarette manufacturers alone contributed roughly Rs. 314 billion to the national exchequer. At the same time, estimates of the illegal and smuggled cigarette market have ranged from approximately 34 percent to more than 50 percent of national cigarette consumption.
FTT said that even under a conservative assumption that the illegal market accounts for around 45 percent of total consumption, a simple proportional comparison with Rs. 329 billion in taxes collected from the documented sector implies a potential revenue loss running into hundreds of billions of rupees. “If the legal side of the market produces hundreds of billions in revenue, a similarly sized illegal side cannot logically produce a tax loss of only Rs. 40 billion unless a very clear and transparent methodology explains the difference,” Amin said.
He added that official FBR statements have previously estimated annual revenue losses from illegal cigarette manufacturing and trade at approximately Rs. 250 billion to Rs. 300 billion. Other government-linked estimates have placed the loss near Rs. 200 billion, while independent assessments have suggested figures approaching or exceeding Rs. 300 billion.
“These estimates differ in methodology, but they all point in the same direction. The revenue loss is measured in hundreds of billions of rupees, not merely tens of billions,” Amin said.
Amin called upon the federal government, FBR, and the relevant Senate committee to require full disclosure of the methodology, data sources, market assumptions, company-level calculations, and definitions used to arrive at the Rs. 40 billion figure. He also urged the authorities to investigate why such a substantially lower figure was presented, given that previous official estimates have been several times higher.
“We are not asking the government to accept any industry number without scrutiny. We are asking for transparent mathematics, consistent definitions, and evidence that can withstand public examination,” Amin said.
FTT concluded that Pakistan’s tobacco-tax policy should be based on independently verifiable market data and transparent revenue calculations.
“The government cannot effectively address a problem if the size of that problem is understated. Accurate measurement is the first requirement for credible enforcement and sound tax policy,” Amin said.