ISLAMABAD, May 04 (DNA): Center for Research and Dialogue (CRD), a Pakistan-based think tank in its recent survey has revealed that following significant increase in cigarette prices, 18 percent of people in the country have quit smoking.
Director CRD, Maryam Gul Tahir said that results of survey have demonstrated that tax hikes promise a win-win for both the public health and the government revenue.
High tobacco taxation serves as a vital measure in combating tobacco consumption, as was advocated by the World Health Organization (WHO), the survey findings underscored.
Historically, the tobacco industry in Pakistan has wielded considerable influence, particularly from multinational corporations.
However, the decisions in the recent past signal a corrective shift in policy aimed at prioritizing public health over industry interests.
In this respect, the government increased Federal Excise Duty (FED) rates after years of stagnation. The policy shift not only safeguards public health but also serves as a fiscal measure to alleviate the economic burden associated with smoking-related healthcare costs.
Last year, in February, the Finance (Supplementary) Act of 2023 saw FED rates spike by 146 percent for economy brands and 154 percent for premium brands, marking a significant departure from previous policies.
This strategic decision has already demonstrated tangible outcomes, with cigarette consumption showing a marked decline. A report by the International Monetary Fund (IMF) recognized this positive trend, noting a 20–25 percent reduction in cigarette consumption following the tax hike.
The survey findings not only highlight the decline in overall consumption but also reveal a shift in behavior among smokers.
Around 15 percent of respondents reported reducing their cigarette intake due to the increased prices. This collective response has contributed to an estimated reduction of over 11 billion cigarette sticks in consumption.
According to details, the total consumption of cigarettes in Pakistan ranges from 72 to 80 billion sticks annually, inclusive of various sources such as officially produced, smuggled, and untaxed products.
“We urge the government to consolidate the gains and continue the policy of increasing cigarette prices to sustain the decline in consumption,” Maryam said.
She said that Pakistan was still lagging behind from the regional countries and rest of the world as cigarettes prices were still cheaper when compared with others.
The call for intensified taxation aligns with international guidelines, notably the World Health Organization Framework Convention on Tobacco Control (WHO FCTC), which emphasizes the correlation between increased prices and reduced consumption.
The IMF has advocated for a uniform taxation structure on tobacco products to further curtail consumption and boost government revenue.
Similarly, the World Bank pointed out “A significant revenue gain of 0.4 percent of GDP (PKR 505.26 billion) could be achieved by applying the current rate on premium cigarettes (Rs. 16.50 per cigarette) to standard cigarettes as well.”
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