Politically Connected Tobacco Industry Prevails as Enforcement Falters Under Pressure

ISLAMABAD: In what appears to be a major setback for Pakistan’s tax enforcement regime, politically connected cigarette manufacturers have effectively succeeded in stalling the continuity of crackdowns against tax evasion, as field officers grow increasingly reluctant to pursue legal action under mounting pressure.

Sources within the tax machinery reveal that officers of the Inland Revenue are facing intense political interference and public humiliation, creating a climate of fear and disillusionment. As a result, many officials have scaled back enforcement efforts and are confining themselves to routine administrative duties rather than initiating action against cigarette factories with strong political backing.

The situation reportedly worsened after senior officials of the Federal Board of Revenue (FBR) were allegedly subjected to public criticism and embarrassment during proceedings of the Senate Standing Committee on Interior, with these incidents widely amplified in the media. This has triggered widespread unease among field formations, raising concerns that the ongoing anti-tax evasion operations in the tobacco sector may effectively grind to a halt.

Despite these challenges, enforcement data shows fluctuating trends. During fiscal year 2023–24, authorities conducted 624 raids against illegal cigarette operations.

Acting on these directives, field teams carried out raids without discrimination, including operations against cigarette factories owned by influential political families.

Among those reportedly targeted were Universal Tobacco Company linked to Senator Faisal Saleem’s family, Indus Tobacco Company owned by the Hotti family of Mardan, as well as Souvenir Tobacco Company and Khyber Tobacco Company.

This number dropped to 472 in 2024–25. However, under directives from Prime Minister Shehbaz Sharif, the FBR launched an intensified nationwide crackdown. In the first nine months of the current fiscal year (July–March), approximately 710 enforcement actions have been reported.

Officials allege that several individuals linked to the cigarette industry or their close relatives hold positions in the Senate, National Assembly, and provincial assemblies.

These individuals are said to be using their roles in parliamentary standing committees to exert pressure on tax authorities. There are also indications that platforms such as the Senate Standing Committee on Interior may have been used to advance vested interests.

Further details suggest that Universal Tobacco Company, reportedly owned by a politically influential family from Mardan, has faced serious allegations of tax evasion and money laundering.

An inquiry initiated last year by the Federal Investigation Agency (FIA) remains stalled, while members of the relevant Senate committee have maintained silence on the FIA’s inquiry against Universal Tobacco Company.

According to FBR sources, enforcement actions have led to the seizure of raw materials worth over Rs. 4 billion linked to tax evasion by Universal Tobacco Company.

More recently, machinery belonging to the company was sealed during the crackdown. However, officers involved in these actions are now reportedly facing backlash in the form of inquiries and humiliation on public forums.

Policy experts and insiders are calling on top level decision makers responsible for issuing high level directives to take immediate notice of the situation.

They argue that unless political pressure is curtailed and institutional backing is strengthened, honest officers working in the field will continue to be demoralized, ultimately undermining efforts to curb tax evasion and stabilize the national economy