High tax on cigarettes results in lower consumption

Islamabad: Consumption of cigarettes in Pakistan has come down as the government has taken a bold decision to increase taxes to address challenges of public health and revenue generation.

A study by the Capital Calling, a think tank, has revealed that one in every 94 smokers has quit smoking after prices of cigarettes went up.

Endorsing the think tank's findings, Dr Aman Khan, director of Islamabad based "Waseela Foundation", said, “The government's decision to increase taxes emerged as a strategy to address both public health concerns and revenue deficits.”

The government finally agreed to increase taxes following persistent lobbying by numerous anti-tobacco and health activists.

In a groundbreaking move, the FBR elevated duty on tier-1 cigarettes from 130 rupees to 330 rupees, resulting in a significant net increase of 154 percent in cigarette prices.

The decision was aimed at increasing the revenue to Rs200 billion from Rs148 billion in the current fiscal year.

According to details, Capital Calling conducted the survey in major cities including Islamabad, Rawalpindi, Lahore and Peshawar.

Smokers told the surveyers that purchasing cigarettes had become financially burdensome, leading them to prioritize spending on essential needs like food and the education of their children instead of smoking.

The survey found a positive relationship between higher taxes on cigarettes and its lower consumption. Needless to say that cigarette industry was causing a staggering loss of approximately Rs620 billion annually in terms of diseases including cancer, chronic respiratory diseases, and cardiovascular disease, besides 337,500 deaths each year.

Pakistan lost a staggering Rs567 billion in potential revenue due to the influence of two Multinational cigarette companies (PTC & PMI) lobbying for low taxes in past seven years.

“Despite losses on various fronts, including public health and revenue, pervasive propaganda has been a hindrance to implementing higher taxes,” Dr. Aman said.

It has also been reported that actual share of illicit and illegal cigarettes in the market is not more than 18 percent, contradicting the inflated claim of 40 percent by multinational cigarette companies. This 18 percent share included smuggled brands from the very multinational companies who make inflated claims.

The evidence suggests the sales of cigarettes would further decrease in the coming months across Pakistan if the government maintains the taxes.