Karachi, March 16, 2025 – Pakistan has successfully achieved a significant reduction in cigarette consumption by implementing stringent taxation policies, marking a crucial step in its public health efforts.
A senior officer of the Federal Board of Revenue (FBR) stated that while revenue collection from the tobacco sector had declined, the volumetric sales of cigarette companies had also witnessed a substantial drop since the beginning of the current fiscal year. This reflects the effectiveness of Pakistan’s high taxation strategy in curbing smoking rates.
READ MORE: Pakistan Burns Rs 276 Billion on Cigarettes in Nine Months
According to half-year revenue collection data released by the FBR, sales tax collection from cigarettes plummeted by 26.1%, dropping to Rs 19.67 billion during July–December of the current fiscal year, compared to Rs 26.61 billion in the same period of the previous year. Similarly, the collection of Federal Excise Duty (FED) showed a slight decline of 2.4%, totaling Rs 103 billion in the first half of this fiscal year, compared to Rs 105.40 billion in the corresponding period last year.
For several years, Pakistan has adopted a firm stance on imposing higher taxes to discourage cigarette consumption and enhance public health awareness. However, while cigarette sales have fallen significantly, leading companies in the industry have faced severe financial losses. “The volumetric sales of cigarettes have drastically declined,” stated an official at Philip Morris Pakistan, speaking on condition of anonymity.
READ MORE: SDPI Urges Public Health Approach to Tobacco Taxation
Despite the success in reducing cigarette consumption, concerns have been raised about the unintended consequences of high taxation, particularly the rise in illicit cigarette trade. Industry insiders argue that excessive taxation is fueling cigarette smuggling and pushing consumers towards unregulated, untaxed products. As a result, some stakeholders advocate for a tax reduction to curb illegal sales in Pakistan’s tobacco market.
A recent report in national media indicated that the FBR had sought approval from the International Monetary Fund (IMF) to lower taxes on cigarettes for the remaining months of the current fiscal year. However, the IMF rejected the proposal, reinforcing the government’s commitment to maintaining higher cigarette taxes as a public health priority.
Dr. Sajid Amin Javed, Deputy Executive Director at the Sustainable Development Policy Initiative (SDPI), emphasized at a recent event that cigarette taxation should be viewed as a fundamental public health policy rather than merely a revenue-generation tool. He urged the FBR to formalize tobacco taxation as part of a broader cigarette control strategy, implement a unified tax system across all tobacco products, and recognize that higher taxation effectively deters smoking in Pakistan.