Taxes on Cigarettes in Pakistan – 70 Billion Sticks Consumed Annually 

Taxes on Cigarettes in Pakistan are a crucial matter. Everyone knows the drastic impact of cigarette smoking on health, causing fatal diseases like cancer, oral cavity and chronic respiratory diseases, and cardiovascular diseases. However, smokers remain uninfluenced even after seeing the horrible images of warnings on cigarette packs. 

Taxes on Cigarettes in Pakistan

Observing the smoking patterns of Pakistanis with an estimated 70 to 80 billion sticks consumed annually, health consequences, and the guidelines by IMF and WHO to implement Taxes on Cigarettes in Pakistan, the government took a much-wanted decisive step. 

What are Taxes on Cigarettes in Pakistan?

Taxes on Cigarettes in Pakistan

A government-proposed, 154% hike in Federal Excise Duty (FED) on cigarettes, backed by the World Health Organization (WHO) was imposed in 2023. Health Activists and Social Policies Development Centre (SPDC) also suggested an additional 37% hike on FED to avoid millions of losses to the national exchequer and minimize tobacco consumption.

Over the globe, countries have been imposing heavy taxes on the tobacco industry to decrease consumption and lower the burden on the healthcare system. Luckily, the countries have to some extent achieved their goals.

Big Brands’ Influence Taxes on Cigarettes in Pakistan

Taxes on Cigarettes in Pakistan

The dynamics of the cigarette industry are quite complex. Many years have passed since the government imposed taxes on tobacco and cigarette manufacturing for both local and international companies.  However, the bigger stakeholders including the Pakistan Tobacco Company & Philip Moris International have a strong influence on decision-making. According to reports, the country has faced almost Rs. 500 billion loss in revenue in the past decade from this industry alone. However, proper taxation and policy-making are important to regularize the industry. 

Expected Outcomes from Taxes on Cigarettes in Pakistan

Taxes on Cigarettes in Pakistan

The government, WHO, IMF, and health activists have expected a decrease in tobacco consumption due to high prices. Looking at the statistics, there are 31 million tobacco users in Pakistan, a major part of which are adults below 30 years old. Smoking and tobacco consumption cause an estimated 1,60,000 deaths per year. 

To lower the death toll and the burden on the national healthcare system, health activists are suggesting a price hike will decrease the consumption of tobacco. Additionally, taxes will also help in getting more revenues. Although the revenue collection from July 2023 to Jan 2024, is estimated at Rs. 122 billion. However, the 37% FED will help generate Rs.60 billion in revenue from the cigarette industry. The IMF, and WHO also assume that Taxes on Cigarettes in Pakistan and other countries will result in higher prices and lower consumption. 

Effects of Taxes on Cigarettes in Pakistan 

Taxes on Cigarettes in Pakistan

According to the statistics, the effects of Taxes on Cigarettes in Pakistan have been positive. Islamabad Centre for Research and Dialogue (CRD) stated an 18% drop in smoking. Other than that, FBR can collect more revenue from this industry through proper taxation, 

Another major impact of taxation is the rise of illegal companies selling cheaper cigarettes costing Rs. 80 to 120 per pack. Smokers are consuming these cigarettes that are even more dangerous for their health. Hence, some analysts and surveys have stated that high taxation has failed to achieve the goal of changing consumer patterns. The illicit and tax-evaded companies will eventually put more burden on the health system due to the increased number of patients. 

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