LAHORE - The imposition of an additional tax of Rs 36 billion on the legal cigarettes industry will further increase the price gap between legal cigarettes and illegal cigarettes. The difference between the price of legal and illegal cigarettes and the decline in the purchasing power of the people is the main reason for the growth of the illicit cigarette trade in Pakistan. According to a global market research firm study, the value of government revenue loss from the illicit trade of cigarettes in Pakistan has exceeded Rs 77 billion. It is worth mentioning here that a major influx of illegal cigarettes is coming from factories in KP and Mardan. These factories are exploiting loopholes in tax regimes. Authorities have failed to eliminate these hubs, resulting in such growth of the illicit market. It is imperative that the government enforces the country’s laws on cigarettes uniformly, cracks down on illegal cigarette companies, and implements a track and trace system on the illegal factories as soon as possible instead of making legal cigarettes more expensive, illegal cigarettes should be taxed. In the absence of uniform and effective enforcement of laws and the dominance of illegal cigarettes in the tobacco market, companies operating legally may wind up their business from Pakistan or force a change in the business model that would reduce the revenue from cigarettes but will also jeopardize the future of tobacco cultivation and direct employment in the cigarette industry.