ISLAMABAD, May 7, 2026 – Policy experts at a seminar hosted by the Sustainable Development Policy Institute on Thursday called on Pakistan’s government to raise tobacco taxes in the 2026-27 federal budget, saying stronger taxation could reduce smoking rates, improve public health and increase revenue collection.
The policy dialogue, titled “Strengthening Tobacco Taxation for Public Health and Fiscal Gains: Preparing for the 2026-27 Budget,” brought together researchers, economists and public health experts who advocated eliminating the existing two-tier tax structure on cigarettes and introducing targeted measures to discourage youth smoking.
Opening the seminar, Syed Ali Wasif Naqvi, senior research associate at SDPI, said tobacco taxation remained one of the most effective evidence-based tools for improving public health while enhancing domestic revenues.
He said SDPI analysis suggested that even a one-percentage-point reduction in smoking prevalence could help recover around Rs294 billion in economic losses and generate more than Rs103 billion in additional tax revenues.
Naqvi said Pakistan, classified as a lower-middle-income country, remained behind recommended tobacco taxation benchmarks and urged authorities to review the two-tier taxation system to reduce market distortions and industry manipulation.
Dr Sajid Amin Javed, deputy executive director at SDPI, described tobacco taxation as a “win-win” policy for revenue generation, economic stability and healthcare outcomes.
He proposed higher taxes on commonly consumed cigarette brands and recommended earmarking a portion of tobacco tax revenues for improvements in the health sector.
Javed also highlighted rising youth vulnerability to smoking and called for higher taxes on tobacco products popular among younger consumers, alongside awareness campaigns and educational initiatives on smoking-related health risks.
Waseem Iftikhar Janjua, senior advisor at SDPI, criticised the current two-tier taxation structure, saying it encouraged smokers to switch to cheaper cigarette brands rather than quit smoking altogether.
He urged the government to gradually narrow the tax gap between premium and economy brands and eventually move towards a single-tier taxation system.
Janjua also recommended automatic annual increases in excise duties that exceed inflation and economic growth rates under a three-to-five-year reform roadmap.
Referring to benchmarks set under the World Health Organization Framework Convention on Tobacco Control, he noted that Pakistan’s tax share on cigarette retail prices remained below the recommended 70%.
Dr Ashar Malik of Aga Khan University said tobacco products should not be treated as ordinary consumer goods due to their severe health consequences.
He warned that alternative tobacco products, particularly smokeless tobacco, continued to escape adequate taxation because of regulatory gaps and called for expanding tax coverage to all tobacco products.
Dr Irfan Chatha, research fellow at SDPI, said taxation alone would not be sufficient without stronger enforcement measures and institutional coordination to curb illicit trade.
He noted that cigarette consumption in Pakistan remained around 80 billion sticks annually and urged policymakers to treat tobacco taxation not only as a revenue measure but also as a core public health intervention.