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Health activists and civil society organizations have urged the government to raise taxes on cigarettes in the upcoming budget (2023-24). They argue that taxation is a crucial revenue source for any government, and levying higher taxes on non-essential items like tobacco would not only reduce the budget deficit but also curb expenditures related to tobacco-related diseases.
Sanaullah Ghumman from the NGO PANAH stated that their organization has long been advocating for discouraging smoking in society due to its detrimental health effects. He emphasized that the government should regularly impose taxes on cigarettes in line with the recommendations of the World Health Organization (WHO).
Malik Imran, the Country Head of the Campaign for Tobacco-Free Kids (CTFK), highlighted that as a result of the government’s decision to increase Federal Excise Duty (FED) on cigarettes in February 2023, an additional Rs. 11.3 billion in FED revenue was generated in the fiscal year 2022-23. This represents a 9.7 percent increase compared to the previous year.
Furthermore, an additional Rs. 4.4 billion in Value Added Tax (VAT) revenue was collected in the fiscal year 2022-23, marking an 11.5 percent increase from the previous year. This additional revenue of Rs. 15.7 billion amounts to 0.201 percent of GDP, providing a significant boost to Pakistan’s struggling economy.
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Imran emphasized that these figures clearly demonstrate the economic benefits of increased taxation, refuting claims made by the tobacco industry regarding illicit trade. He stated that the tobacco industry inflates the figures of illicit trade to divert attention from their own underreporting practices. These companies underreport their production and sell their unreported products in the illicit market, resulting in billions of losses for the national exchequer.
Dr. Ziauddin Islam, a retired government employee, highlighted that tobacco is the leading silent killer in Pakistan, causing more than 170,000 deaths each year. This epidemic also imposes an annual economic burden of 615 billion, equivalent to 1.6 percent of Pakistan’s GDP. He explained that increased prices lead to a decrease in production and consumption, subsequently reducing the burden of healthcare costs.
According to estimates, there has been a 31.7 percent decline in the declared production of cigarettes in the fiscal year 2022-23 compared to the previous year. Learning from this example, which is also recommended by the World Health Organization, Pakistan should raise taxes at regular intervals to account for inflation and per capita income, ensuring the protection of Pakistanis from the harms of tobacco products.
Khalil Ahmed Dogar, Program Manager at SPARC, emphasized that the tobacco industry is targeting children in Pakistan to recruit “replacement smokers.” Approximately 1,200 Pakistani children between the ages of 6 and 15 start smoking every day.
He mentioned that, on average, Pakistani smokers spend 10 percent of their monthly income on cigarettes. Therefore, increased prices remain the most effective tool in preventing these harmful products from being affordable for children and low-income groups.
Khalil added that all stakeholders must set aside their differences and unite to protect children and youth from the harms of tobacco. Regularly increasing tobacco taxes is a step that should be consistently implemented.
