Increasing Tobacco Taxes Can Save Lives and Raise Revenue: Better Tax Administration Will Maximize the FED’s Potential

This Policy Brief was written by Maryam Mirza. The policy brief discusses the illicit cigarette market in Pakistan. Despite the tobacco industry's claims, recent studies estimate that the illicit cigarette market is small and represents between 9% and 17% of the country's total cigarette market. The main component of this market is undeclared production by tobacco manufacturers, as the Federal Bureau of Revenue relies on voluntary declaration of production. Moreover, the AJK cigarette industry does not contribute significantly to the illicit market because its cigarette production represents only 1% of Pakistan's total production. In order to reduce illicit cigarette trade, Pakistan should strengthen its tax administration by implementing strategies from the WHO FCTC Protocol to Eliminate Illicit Trade in Tobacco Products, while continuing to raise tobacco taxes to reduce consumption.