Islamabad, March 24, 2025 – Dr. Waseem Iftikhar Janjua, Senior Advisor at the Sustainable Development Policy Institute (SDPI), has raised serious concerns regarding the manipulative tactics employed by the tobacco industry, particularly in tax evasion and policy influence.
Speaking at a roundtable discussion titled “Tobacco Industry’s Tactics of Manipulation of Budgetary Taxes: Policy, Practice, and Evidence,” organized by SDPI, Dr. Janjua highlighted how tobacco companies frequently exaggerate figures on illicit trade to mislead policymakers and resist taxation reforms. Independent academic research, he noted, provides a much lower estimate of illicit trade than industry-reported statistics.
He further explained that, contrary to industry claims, increasing tobacco prices have effectively reduced illicit trade rather than escalating it. He also pointed out the introduction of so-called “kiddie packs,” a tactic designed to attract young consumers while circumventing regulatory frameworks intended to curb tobacco consumption. Dr. Janjua emphasized that SDPI remains committed to exposing such deceptive strategies and advocating for evidence-based policy interventions.
Dr. Waseem Saleem, a representative of the World Health Organization (WHO) specializing in tobacco taxation, reinforced the idea that the Federal Excise Duty (FED) on tobacco serves as a tool to reduce consumption rather than solely generating revenue. He observed that, despite periodic tax increases since 2015-16, the FED on cigarettes has remained relatively low, fluctuating between 6% and 6.2%. He refuted the tobacco industry’s argument that high taxes fuel illicit trade, asserting that illicit trade is primarily an enforcement issue rather than a taxation problem.
Dr. Saleem also detailed how small-scale, unregistered tobacco manufacturers evade taxes and how the industry’s strategy of front-loading production manipulates revenue trends. This tactic, he explained, allows companies to falsely depict revenue declines, thereby pressuring the government into reducing taxation. He called for stricter enforcement of tax laws and an expansion of monitoring mechanisms to ensure that all tobacco manufacturers comply with fiscal regulations.
Dr. Fauzia Hanif, Deputy Director at the Ministry of National Health Services Regulations and Coordination, reiterated the Ministry’s commitment to protecting citizens from the adverse health effects of tobacco. She emphasized the significant economic burden imposed by non-communicable diseases (NCDs), particularly heart disease, which is largely attributed to tobacco consumption. She stressed the importance of implementing the National Tobacco Control Strategy 2022-2030, which includes measures such as increasing taxes, strengthening the track-and-trace system, and adopting a multi-sectoral approach to counter misinformation propagated by the tobacco industry.
Asif Iqbal, Managing Director of the Social Policy and Development Centre (SPDC), highlighted the tobacco industry’s manipulative approach to tax policies. He noted that while nine tobacco companies have adopted the track-and-trace system, only three employ automated systems, collectively controlling 60% of the tobacco market. Citing a 2023-24 SPDC survey, he revealed that despite a 19.2% increase in tobacco production, FED revenue saw only a 2.4% decline, while GST collections dropped by 26.1%. These figures indicate that the industry deliberately reduces production to exert pressure on the government to lower tax rates. Additionally, he stated that data gathered by SPDC indicates that the tobacco industry holds a 39% share in illicit trade.
Dr. Shafqat Munir, Deputy Executive Director of SDPI, highlighted the political sensitivities surrounding tobacco cultivation. He called for a balanced approach to controlling its spread rather than outright eradication. Dr. Munir urged the government to formulate a multi-stakeholder implementation mechanism to comprehensively address tobacco-related challenges. He emphasized the need for stronger regulatory enforcement, increased taxation, and coordinated efforts between government agencies, civil society, and health organizations to counter the tobacco industry’s deceptive tactics.
Khalil Ahmed, Programme Manager at the Society for the Protection of the Rights of the Child (SPARC), exposed the industry’s attempts to pressure the government by threatening to relocate operations due to increased taxation. He pointed out that the tobacco industry frequently sponsors biased research studies and uses media platforms to propagate misleading narratives, including paid press releases and advertisements aimed at countering anti-tobacco measures.
Syed Ali Wasif Naqvi, Head of the Center for Health Policy and Innovation, described the paradoxical situation in Pakistan’s tobacco industry at the onset of the fiscal year 2025. Despite a 30% increase in production between July and November 2024, he noted that FED and sales tax revenues had declined by 7.8% and 27.4%, respectively. This inconsistency, he suggested, underscores the industry’s strategic manipulation of production and sales data to undermine taxation efforts.
The roundtable discussion underscored the urgent need for regulatory reforms to counteract the deceptive strategies of the tobacco industry. SDPI and other stakeholders reaffirmed their commitment to advocating for stronger enforcement of tobacco control policies, ensuring that taxation remains an effective tool for reducing consumption, and dismantling industry-driven misinformation campaigns.