Govt can generate additional Rs67.4b annually by raising tobacco taxes

ISLAMABAD - The Society for the Protection of the Rights of the Child (SPARC) has released a statement calling on the government to raise the Federal Excise Duty (FED) on ciga­rettes by Rs. 39 per pack in the up­coming fiscal year 2025-26. This proposed hike is projected to generate an additional Rs.

67.4 billion in revenue, while also con­tributing to a reduction in tobacco use and promoting better public health, said a press release issued here on Friday. Dr.



Khalil Ahmad Dogar, Pro­gram Manager at SPARC, empha­sized the need for decisive action, stating, “Pakistan must take bold measures to tap into substantial revenue potential while address­ing the serious public health risks associated with tobacco use. A Rs. 39 hike in FED could yield Rs.

67.4 billion in total revenue — Rs. 58.

2 billion from FED and Rs. 9.2 bil­lion from GST.

This income could be channeled into critical sectors such as healthcare, education, and child welfare.” Consultative workshop held on countering violent extremism He further noted that research evidence from the February 2023 tax increase demonstrated the ef­fectiveness of such measures. Cig­arette consumption dropped by over 19%, while combined FED and GST revenue rose from Rs.

179 billion in 2022–23 to Rs. 298 billion in 2023–24, making it a clear win-win policy. Dr.

Khalil emphasized that cig­arette prices in Pakistan are still lower than in many other coun­tries. “There is clear evidence that higher tobacco taxes lead to reduced smoking rates and in­creased government revenue. Without immediate action, Paki­stan risks adding 490,000 new smokers in the coming year,” Rais­ warned, urging the government to take strong measures to sus­tain progress and safeguard pub­lic health.

He further added that there is no change in FED since February 2023 and the decrease in the real price of cigarettes due to high in­flation made cigarettes more af­fordable. Multinational companies exaggerate the share of the illicit market, frontloading and under­reporting to evade taxes and to put pressure on FBR for tax reduc­tion. Further, due to illegal brand switching of premium to the econ­omy by one of the multination­al companies cost 7 billion Rs.

in 2024-25. KP CS reviews MTIs’ performance, healthcare services Dr. Khalil pointed out that the last major FED increase in 2023 led to a 19.

2% decline in cigarette consumption while raising tax rev­enue from Rs. 142 billion in 2022-23 to Rs. 237 billion in 2023-24.

However, the lack of additional tax hikes has made cigarettes more af­fordable, undermining the positive effects of previous measures.he Pa­kistan is a signatory to the World Health Organization’s Framework Convention on Tobacco Control (WHO FCTC), which identifies tax­ation and pricing strategies as ef­fective means to curb tobacco use. Article 6 of the convention urg­es member countries to adopt tax policies aimed at reducing tobacco consumption while also boosting public revenue.

Several countries have successfully adopted these measures, directing tobacco tax in­come toward healthcare programs and anti-smoking efforts. Tags: raisgovt generate additional.