Pakistan Tobacco Sales Plunge After Tax Hike

Cigarette consumption in Pakistan dropped by 20 billion sticks following an unprecedented increase in the country’s federal excise duty (FED), reports the Associated Press of Pakistan, citing figures from Capital Calling.

In February 2023, the government hiked the FED by 146 percent, following several years of comparatively small increases.

In its study, Capital Calling found that the tax hike prompted 14 percent of smokers to quit, which caused cigarette consumption to decline by 11 billion sticks. Ten percent of smokers reduced their intake, which drove consumption down by an additional 9 billion cigarettes, according to the study.

In 2022, Pakistan’s total cigarette consumption was estimated between 72 billion and 80 billion sticks, a figure that includes officially declared production, smuggled cigarettes, counterfeit products and cigarettes for which duties have not been paid.

According to the new study, the volume now stands at around 62 to 64 billion sticks.

Capital Calling expects the Federal Board of Revenue to collect between PKR230 billion ($809.87 million) and PKR240 billion in cigarette duties this year. In 2018, the figure was PKR87 billion.