ISLAMABAD – The World Health Organization (WHO) has issued a stark warning following the Federal Cabinet’s decision to keep Federal Excise Duty (FED) rates on cigarettes unchanged in the 2025–26 federal budget.
According to a detailed post-budget analysis report released by the WHO on Wednesday, the move threatens to reverse hard-won public health gains and could significantly increase cigarette consumption in Pakistan.
The WHO report highlights that since February 2023, FED rates on cigarettes have not been revised, and the government has chosen to maintain this status quo in the newly announced fiscal plan. With inflation soaring by 26% during this period, the real value of both FED and retail cigarette prices has eroded sharply, making tobacco products increasingly affordable in real terms.
The WHO estimates that cigarette production for FY 2024–25 will reach approximately 37 billion sticks—reflecting a 12.4% year-on-year increase based on data from the Pakistan Bureau of Statistics. Despite this upward trend, the government has surprisingly set a conservative FED revenue target of Rs 147 billion for FY 2024–25, even though actual collections reached Rs 157 billion during just the first nine months. According to projections, total FED revenue for the full year is expected to be around Rs 208.2 billion.
For FY 2025–26, the WHO projects that, in the absence of a rate hike, cigarette production could rise further to 38 billion sticks, with FED collections reaching Rs 217.6 billion. However, the organization strongly argues that merely increasing revenue is not sufficient if it comes at the cost of higher smoking rates and deteriorating public health.
The WHO has suggested an alternative policy scenario involving a Rs 39 per pack increase in FED, which could cut cigarette consumption by approximately 10.7% and reduce production to 34 billion sticks. This measure, the report states, could simultaneously boost FED revenue by over 20.9%, enhance public health outcomes, and reduce the burden of smoking-related illnesses.
In addition to regular upward adjustments in FED rates, the WHO urges the Pakistani government to crack down on illicit tobacco trade, enforce better monitoring of supply chains, and regulate cigarette inputs. Without such measures, it warns, the current policy risks failing both fiscal and public health objectives.