ISLAMABAD - Expressing grave concern over the human health cost due to the increased tobacco consumption in the country, the Social Policy Development Centre (SPDC) has proposed an increase of 37 percent in Federal Excise Duty (FED) on tobacco products arguing it would not only reinforce the gains already achieved but also advance further in enhancing public health outcomes and revenue collection.
“Pakistan can save as many as 265,000 lives, generate an additional revenue of Rs37.7 billion and push 757,000 people to quit smoking through increasing the FED by 37 percent,” said the SPDC policy paper “Recovering Healthcare Costs and Saving Lives” that aligns recommendations of WHO and CTFK.
The SPDC proposal comes when the government prepares to outline its budgetary agenda, in a bid to prioritise public health and economic prosperity through targeted tobacco tax reforms.
Pakistan was among the countries where smoking has high prevalence. The data shows that a staggering 31.6 million adults—equivalent to nearly 20% of the adult population—use tobacco products in Pakistan.
Pakistan has two-tiered system of FED on cigarettes. The country made significant strides and increased the FED on cigarettes in 2022-23 with substantial increase in FED. The current FED share in retail prices is 48 percent and 68 percent respectively for low and high tiers. The SPDC has warned of negative effect on both the revenue and public health efforts if the rates (FED) were not increased and trend was not maintained. Therefore, it advocated to further adjust the FED in line with international standards, to take the tax share of retail prices towards 70 percent.
The proposal was backed by the gains of previous tax adjustments, which have demonstrated tangible reductions in smoking rates and significant financial gains for the government.