A new report by independent think tank PRIME has revealed a whopping Rs750 billion tax evasion scandal striking Pakistan’s economy annually — and it’s originating from some of the nation’s largest business industries.
The report, which throws a light on illicit trade and smuggling, details how mundane industries such as tobacco, oil, pharmaceuticals, tyres, and even tea are quietly siphoning off the national exchequer through unregulated and illegal means.
Tobacco tops the list
At the head of the chart stands the tobacco industry, with an eye-popping 65% of trade being unlawful. This single fact rings up an astonishing Rs300 billion in lost tax income each year. With so great a share of the sales being untaxed, the legal cigarette industry cannot compete, and the state loses billions in potential tax income.
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Fuel smuggling from Iran bleeding billions
Fuel smuggling is yet another huge culprit. The report says that approximately 2.8 billion litres of petrol and diesel are smuggled from Iran to Pakistan every year. This black marketing of fuel generates an estimated Rs270 billion loss in revenue to the government — sufficient enough to be used for implementing a few government welfare projects.
Fake and substandard medicines pose double threat
In the pharmaceutical sector, nearly 40% of the drugs available are either fake or substandard. Besides the serious health risks these medicines pose, they also contribute to a loss of Rs60 to Rs65 billion in taxes. It’s a crisis that endangers lives while robbing the state of much-needed resources.
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Smuggled tyres and tea
Illegal tyre trade is another offender, and 60% of tyres in the market are said to be smuggled. Tax evasion due to this here is estimated at Rs106 billion per year. 30% of tea being consumed in Pakistan is smuggled, and that costs the country about Rs10 billion per annum.
This report lays bare the bitter truth that illegal trade is not only a law enforcement problem — it’s a huge economic crisis. These colossal losses translate to fewer funds for healthcare, education, infrastructure, and public development.
