LAHORE: Without expanding the tax base and rigorously enforcing a comprehensive track and trace system, the government will struggle to achieve its tax-to-GDP ratio target of 13%, according to Fawad Khan, spokesperson for Mustehkam Pakistan.
“The government must act swiftly and decisively against illicit trade to bolster revenue and alleviate the tax burden on ordinary citizens. Despite being nearly six weeks past the budget announcement, illicit items remain rampant in the market,” Khan stated.
Khan expressed grave concern about the impact of illegal trade on Pakistan’s economy and marginalized communities. A recent foreign research report estimates that about 1 trillion rupees are lost annually due to tax evasion in key sectors, including real estate, pharmaceuticals, tyres and lubricants, tea, and cigarettes.
He highlighted that the illegal cigarette trade alone results in over 310 billion rupees in lost revenue each year, a figure that is expected to rise. Khan warned that if cigarette brands are not included in the digital monitoring system, illegal trade could reach up to 65% this year, exacerbating issues for legitimate businesses and the government.
It is estimated that 50-60% of cigarettes sold in Pakistan are illegal, leading to significant economic losses.
Khan emphasized that failing to effectively implement the track and trace system could severely impact the government’s ability to meet its tax revenue targets for the fiscal year 2024-25. This shortfall could force increased borrowing, worsening economic instability and debt levels.
