The affordability of cigarettes in Pakistan has significantly decreased over the past three years, making it easier for illegal cigarette manufacturers to lure consumers by offering cheaper illegal cigarettes.
Recent regional data shows that Pakistan’s cigarette market is one of the least affordable among both South Asian and WHO Eastern Mediterranean Region (EMR) countries. Over the past three years, the affordability of cigarettes in Pakistan has significantly declined, resulting in an increase in illegal cigarette consumption, even though the number of cigarette consumers has continued to rise.
Pakistan’s cigarette market is ranked fourth least affordable among the 15 WHO EMR countries in terms of income levels in 2023. Among the six South Asian countries, Pakistan ranks third for having the least affordable cigarette market in 2023.
The massive Federal Excise Duty hike in February and the ongoing inflationary situation of the country have reduced the purchasing power of Pakistani residents, leading them to turn to cheaper, illegal cigarettes. This trend is alarming, as it not only harms public health but also deprives the government of much-needed tax revenue. In fact, tax evasion from the illegal tobacco trade is estimated to cost the government more than Rs. 240 billion each year.
Therefore, it is essential for the government to take decisive action to curb the illicit tobacco trade and bring it under the tax ambit. Doing so will not only reduce the harm caused by smoking but also provide resources for societal advancement.