Cigarette Tax Hike in Pakistan Resulted in Reduced Consumption and a Shift Towards Cheaper Brands

This Policy Brief was written by Social Policy and Development Centre in Pakistan. The policy brief assesses responses of consumers to the increase in cigarette prices based on a nationwide survey. In FY 2022-23, the excise duty on cigarettes was significantly raised, including an increase of 150% in February of 2023. The researchers find that cigarette consumption decreased by 19.2% in that time, and 26.3% of smokers reported consuming fewer cigarettes. 90% of smokers attributed the decrease in their cigarette consumption to higher prices. The results also suggest that smokers switched from premium to economy brands following the excise tax increase. Specifically, the share of premium brands declined from 20% in 2021-22 to 6% in 2022-23. Although prohibited by law, 35% of smokers reported buying loose cigarettes, and 27.6% reported purchasing packs below the minimum price. The policy brief concludes with recommendations for policy makers to continue to raise tobacco taxes, reduce the price gap between low- and high-price cigarette brands, and strengthen tax administration.