Pakistan Urged to Raise Tobacco Taxes

Health activists want Pakistan to increase its Federal Excise Duty (FED) on cigarettes to 70 percent of retail prices, in line with international standards, reports Dawn. Achieving that level requires a rate hike of 37 percent.

According to proponents of the measure, raising taxes would not only reduce the burden on Pakistan’s healthcare system, but also earn the government much-needed revenue. They calculate that a 37 percent FED hike would generate an additional PKR60 billion ($215.7 million) from cigarettes for 2023-2024. Revenue collections from July 2023 to January 2024 reached PKR122 billion, with full year estimates exceeding PKR200 billion.

Backers of the increase reject tobacco industry arguments that tobacco tax hikes fuel illicit trade, suggesting that tobacco firms manipulate their reported production to influence tax policy.

According to activists, some 31.6 million adults currently use tobacco in Pakistan, resulting in more than 160,000 deaths every year, while smoking-related illnesses and deaths cost the country at least 1.4 percent of its GDP annually.

Antismoking groups are also urging the government to embed healthcare cost-recovery in tobacco tax policy through automatic adjustments to excise taxes, ensuring that they cover a certain percentage of the total health costs attributable to smoking.