A recent study titled “Higher tobacco tax helps bring down the sale of cigarettes in Pakistan” has revealed that the government is expected to collect Rs200 billion from the tobacco industry this year, following an increase in taxes.?
In the previous fiscal year, tax collection from the tobacco industry amounted to Rs148 billion.
The study, conducted by The Capital Calling and released on Sunday, indicates that due to the high taxes resulting in increased cigarette prices, one in every 94 smokers in the country has been compelled to quit smoking.
?The significant rise in Federal Excise Duty (FED), ranging from 146% to 154% in February of this year, has played a role in motivating smokers to give up the habit.
Based on ground surveys conducted in Islamabad, Rawalpindi, Lahore, and Peshawar, the study found that smokers who quit were now saving money that was previously spent on cigarettes.
?These individuals are now allocating those funds towards fulfilling other needs such as food, education, healthcare for their children, and utility bills.
The tobacco industry not only poses health risks but also imposes a financial burden on the national exchequer.
?It is estimated that the industry causes a loss of approximately Rs620 billion in terms of diseases like cancer, chronic respiratory diseases, and cardiovascular diseases. Moreover, it contributes to around 337,500 deaths annually.
The study also addressed concerns regarding illicit cigarettes in the market.?
While multinational companies claim that illicit cigarettes account for approximately 40% to 42% of the market, the ground surveys suggest that their actual share is not more than 18%.
The study emphasizes that companies should not use the prevalence of illegal cigarettes as an excuse to evade taxes and boost profits by selling cheaper cigarettes.
Pakistan Customs officials believe that a significant portion of the 18% of illicit cigarettes is smuggled cigarettes.