ISLAMABAD—Anti-tobacco activists are urging the government to align the tobacco tax with the World Health Organization (WHO) guidelines to address health and financial concerns.
Malik Imran Ahmed, the country head of The Campaign for Tobacco-Free Kids (CTFK), has called for an increase in tobacco taxes to 70% of the retail price, as recommended by the WHO. This proposal comes as the government looks for ways to boost revenue ahead of negotiations with the International Monetary Fund (IMF) for a long-term bailout program.
Pakistan currently has a two-tiered system of Federal Excise Duty (FED) on cigarettes, with the FED share in retail prices at 48% and 68% for low and high tiers, respectively. Malik Imran Ahmed emphasized the need to reduce the number of smokers, especially among the youth, to protect them from the harmful effects of tobacco use, as more than 60% of the country’s population comprises young people.
The data indicates that 19.1% of adults (aged 15 and above) currently use tobacco, with 31.8% of men and 5.8% of women being tobacco users. CTFK has proposed a 37% increase in tobacco taxes to align with market dynamics, previous tax adjustments, and the IMF’s recommendation of taxing non-essential items like cigarettes.
Revenue collected from tobacco taxes reached Rs 122 billion from July 2023 to January 2024 and is expected to exceed Rs 200 billion by the end of the year. This revenue not only contributes to the government’s income but also recoups 17.8% of total healthcare costs associated with smoking-related illnesses in Pakistan.
Tobacco consumption in Pakistan leads to approximately 160,000 deaths annually and accounts for 1.4% of the country’s GDP in healthcare expenses each year. Malik Imran Ahmed believes that the industry can absorb the proposed tax increase and referred to surveys and studies, including one by the IMF, which indicated a 20% reduction in cigarette consumption in Pakistan after prices were increased.
Earlier, the Social Policy Development Centre (SPDC) also advocated for the tax increase, stating that it could save 265,000 lives, generate an additional revenue of Rs 37.7 billion, and encourage 757,000 people to quit smoking.
