Hike In Cigarette Prices Prompted Some To Quit Smoking: Study

FBR's decision aimed to increase cigarette tax revenues from Rs148 billion to Rs200 billion in the ongoing fiscal year

Hike In Cigarette Prices Prompted Some To Quit Smoking: Study

Hike in prices of tobacco products, primarily due to a 154% hike in taxes on the product by the government, has seen a corresponding decline in consumption of the injurious product.

This was claimed in a study conducted by Capital Calling, a network of academic researchers and professionals.

The study, conducted in major cities including Islamabad, Rawalpindi, Lahore and Peshawar, revealed then that one in every 94 smokers quit smoking after prices were increased. 

In the survey, smokers said that purchasing cigarettes had become financially burdensome, leading them to prioritise expenditures on essentials such as food and education for their children. 

Last year, the Federal Board of Revenue (FBR) raised duties on tier-1 cigarettes from Rs130 to Rs330, resulting in a significant net increase of 154%.

FBR's decision aimed to increase cigarette tax revenues from Rs148 billion to Rs200 billion in the ongoing fiscal year.

The study said, "The government's decision to increase taxes emerged as a pivotal strategy to address both public health concerns and revenue deficits."
        
The study claimed that the tobacco industry was causing a staggering loss of approximately Rs620 billion annually to the exchequer in terms of costs inflicted with regard to treatment for diseases including cancer, chronic respiratory diseases, and cardiovascular disease, besides the 337,500 deaths caused by tobacco consumption each year. 

The study claimed that Pakistan had lost a staggering Rs567 billion in potential revenue due to the influence of cigarette companies, which lobbied the government to keep taxes low over the past seven years.

"Despite losses on various fronts, including public health and revenue, pervasive propaganda has been a hindrance to implementing higher taxes," the study claimed.

Moreover, it said that multinational tobacco companies had raised concerns about the prevalence of illegal and illicit cigarettes in the Pakistani market, suggesting that they command a share of the market close to 40%. 

https://thefridaytimes.com/06-May-2024/higher-cigarette-prices-see-18-percent-of-pakistanis-quit-smoking-claims-crd-survey

However, on-the-ground surveys and interviews contradicted these claims, revealing that the actual share of illicit and illegal cigarettes was not more than 18%. This figure included the smuggled cigarettes of brands from the very multinational companies that expressed concern about smuggled cigarettes.

Evidence suggests the sales of cigarettes would further decrease in the coming months across Pakistan if the government further increases the federal excise duty (FED) on the tobacco sector.