ISLAMABAD – A recent survey by the CRD reveals that 18% of smokers have quit due to increased cigarette prices, while 15% have reduced their consumption.
The study shows a strong link between cigarette prices and tobacco use, with 63% of respondents believing higher prices lead to less smoking. This shift in behaviour has resulted in an estimated 20 billion fewer cigarettes consumed annually.
Pakistan has witnessed a significant dip in cigarette consumption due to high prices, and a survey by the Centre for Research and Dialogue (CRD) has validated that taxation is the lynchpin for controlling and curbing cigarette consumption.
“Cigarette consumption has come down by more than 11 billion sticks following the introduction of higher Federal Excise Duty (FED),” said Maryam Gul Tahir, Director of CRD.
“By adopting these measures, Pakistan can follow a tried and tested approach to decreasing cigarette consumption, improving public health outcomes, and simultaneously boosting government revenue through increased taxation on tobacco products,” she said.
According to WHO, “increasing tobacco taxes by 10% generally decreases tobacco consumption by 4% in high-income countries and by about 8% in low- and middle-income countries.”
She said that embracing high cigarette taxes as a deterrent can significantly reduce tobacco consumption and the associated health costs.
Pakistan is grappling with a significant health problem as more than 31 million adults (ages 15 and above) are estimated tobacco users (in various forms); this number translates to nearly one-fifth of the adults (ages 15 and above) of the country.
Pakistan has a two-tier FED structure, and its share in retail prices is 48% and 68%, respectively, for the low and high tiers. Numerous research studies and surveys have validated that increased taxation helps reduce cigarette consumption.
In 2022, Pakistan’s total cigarette consumption ranged between 72 to 80 billion sticks, encompassing officially declared production, smuggled cigarettes, counterfeit products, and cigarettes for which duties have not been paid. These figures highlight the extensive reach of tobacco use in the country and the potential impact of rigorous taxation policies.
Earlier this year, the International Monetary Fund (IMF) recommended that authorities adopt a single-tier tax structure and simplify taxation.
Meanwhile, the World Bank pointed out that applying the current premium cigarette tax rate (Rs. 16.50 per cigarette) to all cigarette categories could generate an additional 0.4 percent of GDP, amounting to PKR 505.26 billion.
