The Extent of Illicit Trade of Cigarettes in Pakistan

This Policy Brief was written by Social Policy and Development Centre in Pakistan. The policy brief assesses the illicit market using data collected from a nationwide survey of smokers. The researchers found that the the total extent of illicit trade is 33% which includes counterfeit cigarettes without the trademark owner's authorization, undeclared production by legitimate brand owners, and smuggled brands without graphic warnings and printed retail prices. Illicit trade is more common in rural areas compared to urban areas, at 37% and 25%, respectively. These findings are much lower than industry claims. Furthermore, the market share of smuggled brands is 12%, which suggests that illicit trade is largely carried out by domestic manufacturers. The newly implemented track and trace system is beginning to address this and reduce illicit trade among brands covered. Finally, the prevalence of loose cigarette sales, which are prohibited by law, is 35%. The policy brief concludes with recommendations for policy makers to continue to raise excise taxes, while implementing evidence-based measures to reduce illicit trade.