Islamabad, May 11, 2025 – The Federal Board of Revenue (FBR) is actively considering a significant increase in the federal excise duty (FED) on cigarettes in the upcoming 2025–26 budget, citing the severe health risks posed by smoking.
The move is aligned with growing pressure from global health bodies, particularly the World Health Organization (WHO), urging Pakistan to adopt stronger fiscal measures to curb tobacco consumption.
Sources within the FBR revealed that the proposal to raise cigarette taxes is part of a broader public health initiative to discourage smoking, which remains one of the leading causes of preventable deaths in the country. “Smoking is injurious to health, and increasing the FED is a globally recognized tool to reduce cigarette consumption,” a senior official emphasized.
When asked about the decline in sales and volumes reported by Pakistan’s two major cigarette manufacturers due to the nearly 200% FED already in place, FBR officials responded that commercial losses cannot override the undeniable health hazards associated with smoking. They also noted that many countries have established minimum tax benchmarks on tobacco to ensure effective regulation and deterrence.
During a recent session of the National Assembly’s Standing Committee on Finance, FBR Chairman Rashid Mahmood Langrial acknowledged the agency’s challenges in combating the illicit cigarette trade. He disclosed that only one out of every ten trucks carrying smuggled or counterfeit cigarettes is seized, largely due to manpower shortages.
To strengthen enforcement, the FBR is working on a strategy to involve provincial law enforcement agencies in monitoring and cracking down on the sale of illegal cigarettes. Cigarettes without the mandatory tax stamp will be deemed illegal, and an official standard operating procedure (SOP) is being developed to coordinate efforts between federal and provincial authorities.
The proposed increase in FED is not only expected to boost revenue but also serve a critical health function by deterring smoking, particularly among youth and low-income groups. As the FBR prepares the final budget recommendations, public health advocates continue to push for strong fiscal policies that reflect the long-term societal cost of tobacco use.