A recent study says the government is expecting to collect around 200 billion rupees in taxes from the tobacco industry this year after the tax hike. In the last fiscal year, the tax collection from the tobacco industry was recorded 148 billion rupees.

Out of 31 million adult tobacco users in Pakistan, one in every ninety-four smokers is forced to quit smoking due to increase in cigarettes prices with higher tax and spend the savings to fulfil other needs like food, education and paying the utilities, reveals a research study released on Sunday.

The study titled, “Higher tobacco tax helps bring down sale of cigarettes in Pakistan,” claimed quoting the ground surveys in Islamabad, Rawalpindi, Lahore and Peshawar that smokers were forced to quit smoking after a significant raise in Federal Excise Duty (FED) ranging from 146 percent to 154 percent in February this year.

More than 31 million Pakistani adults (15+) or about 19.7 percent of the total adults use some of tobacco which is one of the highest in the world.

The interviews with the smokers and data collected from these cities show that they are now saving the money by quitting smoking to fulfil other needs like food, education and health of their children, and paying the utilities, said the study released by The Capital Calling.

The tobacco industry is causing a loss of around 620 billion rupees to the national exchequer in terms of diseases like cancer, chronic respiratory diseases, and cardiovascular disease, besides causing 337,500 deaths every year.

The multinationals claim that share of the illicit cigarettes was recorded around 40/42 percent in the market, though the ground surveys suggest their number is not more than 18 percent, says the study. Pakistan Customs officials believe that in the 18 percent illicit cigarettes, the share of the smuggled cigarettes was significant which could be overcome easily through better border management. 

The multinational companies cannot hide behind the illicit and illegal cigarettes just to evade taxes and boost their profits by selling cheap cigarettes to Pakistani people, it said.

The smuggling of multinational companies’ cigarettes in the local market remains a major concern to the federal authorities as this would largely remain out of the tax circle. The companies were trying to make up their loss in profit with increase in taxes on cigarettes through the sale of their smuggled brands on cheaper rates in the local Pakistani market, the study pointed out.