Evaluating compliance with track and trace and other regulations in Pakistan's cigarette market

Background: To control the illicit cigarette market, the government of Pakistan adopted a Tracking and Tracing System (TTS) that was fully operational by July 2022, despite many roadblocks. By this date, major tobacco companies had either registered their brands with the tax authority and/or installed TTS.

Methods: This paper is the first to evaluate the degree of compliance with the TTS by evaluating the extent and nature of illicit trade in tobacco products. We use randomised sampling to collect cigarette packs from waste recycling stores located in the ten most populous cities of Pakistan, to evaluate illicit trade penetration.

Results and policy implications: Almost a third of the packs collected did not bear a tax stamp, mostly due to the lack of compliance by local companies, confirming a recent review of the TTS implementation by the Federal Bureau of Revenue (FBR). Even the largest companies that ostensibly adopted the TTS did not fully comply with the system, signalling poor enforcement. This is a missed opportunity, since a well-functioning TTS combined with proper enforcement is an effective means of controlling illicit tobacco trade, boosting tax revenue and improving public health. However, the enforcement should not be limited to the TTS since 23.6% of packs did not comply with other regulatory requirements.