The Society for the Protection of the Rights of the Child (SPARC) has called on the government to increase the Federal Excise Duty (FED) on cigarettes in the upcoming 2026–27 budget. The organisation highlighted that this adjustment could raise an additional Rs51 billion in revenue while simultaneously lowering smoking rates across the country.
SPARC recommended a minimum hike of Rs35 per pack for economy cigarette brands and Rs21 per pack for premium brands. They also suggested a gradual move toward a unified tax structure to streamline taxation on tobacco products.
SPARC, these measures could prevent approximately 369,000 young individuals from starting to smoke and reduce the overall number of smokers by around 271,000 nationwide. Dr Khalil Ahmad, SPARC’s Programme Manager, emphasized the heavy toll smoking takes on Pakistan’s healthcare system, contributing to roughly 192,000 deaths annually.
Dr Ahmad pointed out that cigarette tax rates have not been revised since February 2023, which has diminished the real value of tobacco taxes due to inflation. This stagnation has made cigarettes, especially low-cost brands, more affordable and accessible.
He explained that when tobacco taxes remain static, cigarettes effectively become cheaper in real terms, increasing their affordability and attracting more consumers, particularly children and youth. The real FED has dropped by about 23 percent since February 2023, while the tax share on premium brands has fallen from 47.4 percent to 41.7 percent.
Notably, Pakistan remains one of the cheapest cigarette markets in the region, with a pack of 20 cigarettes costing Int$3.46. This price is significantly lower than the Int$6.32 average in the Eastern Mediterranean Region and Int$10.91 in South-East Asia. Dr Ahmad warned that this price disparity encourages higher consumption and raises the risk of youth initiation into smoking.
He also highlighted the substantial economic burden tobacco use imposes, estimating the annual cost of smoking at Rs1,835 billion, which is about 1.6 percent of the country’s GDP. This figure far exceeds the revenue generated from tobacco taxation. The costs include healthcare expenses and productivity losses due to smoking-related illnesses.
To address these issues, SPARC advocates for a progressive taxation policy adjusted for inflation. Their proposal includes annual FED increases of around 35 percent on economy brands and inflation-linked hikes of approximately 6.5 percent on premium brands to reduce the price gap between different cigarette tiers. Narrowing this gap is crucial, as cheaper cigarettes tend to attract younger and first-time smokers.
Regarding concerns about illicit cigarette trade, Dr Ahmad noted that independent estimates place it at 33–34 percent of total cigarette consumption. He stressed that Pakistan, as a signatory to the World Health Organization Framework Convention on Tobacco Control, has a responsibility to strengthen tobacco taxation to safeguard public health.
In a significant development, Dr Ahmad stated that raising tobacco taxes is the most effective strategy to curb consumption. The proposed FED increase aligns with international best practices and would not only boost government revenue but also protect young people from becoming addicted to tobacco.
