ISLAMABAD: Pakistan’s commerce minister said on Wednesday the government would review proposals from the tobacco industry on taxation and illicit trade ahead of the federal budget, as Islamabad seeks to broaden its tax base and strengthen the country’s documented economy.
The discussions between Commerce Minister Jam Kamal Khan and representatives of the Pakistan Tobacco Company (PTC) took place as Pakistan prepares to unveil its federal budget for the next fiscal year on June 12 and seeks to raise revenues under a $7 billion International Monetary Fund (IMF) program. Expanding the tax net and reducing undocumented economic activity have remained key priorities for successive governments seeking to improve public finances and attract investment.
The tobacco sector has long been at the center of debates over taxation and illicit trade in Pakistan. Manufacturers argue that illegal cigarette sales undermine government revenue collection and create an uneven playing field for tax-compliant businesses while public health advocates have supported higher tobacco taxes as a way to discourage smoking.
“We will carefully examine the industry’s proposals and continue working with stakeholders to promote a business-friendly environment, expand the tax net, curb illicit trade, and attract investment to Pakistan,” Khan said in a statement posted on X.
The minister said he had discussed industry challenges, taxation, enforcement against illicit trade and measures to strengthen Pakistan’s documented economy during the meeting.
“A strong formal sector is essential for investment, exports, employment, and sustainable economic growth,” Khan said.
Pakistan has repeatedly identified undocumented economic activity as a major challenge to revenue collection, with authorities arguing that bringing more businesses into the formal economy is necessary to improve compliance and reduce pressure on existing taxpayers.
The federal budget is likely to outline new revenue measures as the government seeks to balance fiscal consolidation with economic growth while meeting commitments under its IMF-backed reform program.
