Experts urge track and trace system in tobacco sector

KARACHI: Prime Minister Shehbaz Sharif has emphasised the urgent need for comprehensive digital monitoring within the tobacco and other key sectors. Chairing a high-level meeting, the prime minister directed authorities to take strict action against individuals and sectors involved in tax evasion.

Tax and industry experts, in a press release, have echoed the prime minister’s stance, urging the government to implement the track and trace system (TTS) across the board to curb massive tax evasion.

Experts argue that just as TTS has led to significant gains in tax revenue in the sugar and cement sectors, a similar enforcement in the tobacco industry could help the government recover hundreds of billions in lost revenue annually.According to market estimates, over 50 per cent of cigarettes sold in Pakistan are illicit, causing more than Rs300 billion in losses to the national exchequer each year.

“Legal cigarette manufacturers with less than 50 per cent market share are bearing 98 per cent of the total tax burden, while illicit players contribute barely two per cent,” said Head of Corporate Finance & Advisory at Intermarket Securities Limited Syed Saifullah Kazmi. “The continuation of this imbalance is unsustainable, and strict enforcement of mechanisms like TTS is absolutely necessary.”

The prime minister emphasised the importance of taking strict action against tax evaders and expanding the digital monitoring framework to ensure transparency and boost the tax-to-GDP ratio.