Despite global evidence that tobacco taxation curbs consumption, Pakistan’s tax system remains weak and prone to evasion. Nearly one in five adults uses tobacco, yet under‑reporting of cigarette production by manufacturers has cost the government an estimated PKR 29.5 billion in lost revenue between 2018–19 and 2020–21. With only three firms dominating the market, reliance on self‑declaration without effective audits has created incentives for under‑reporting and fueled illicit trade. This SPDC brief highlights the scale of under‑reporting and calls for stronger monitoring and enforcement to safeguard fiscal and public health objectives.
