Research

Modelling the Revenue and Health Implications of Tobacco Tax Policy in Pakistan: Options for the Federal Budget 2021-22

This Policy Note was written by Social Policy and Development Centre (SPDC) in Pakistan. The policy note assesses the expected impact of excise tax and price increases in Pakistan on cigarette consumption, tax revenues, and health outcomes. Currently, the excise tax share of price is 42.6% for low-price packs and 59.8% for premium packs. Due to their affordability, the authors find that the market share of low-price cigarettes is 92%. The policy note considers two scenarios: a 30% increase in the Federal Excise Duty (FED) and a 40% increase in the FED. Both scenarios have significant public health and fiscal implications. A 30% increase results in 219,000 fewer smokers, while increasing the FED 40% results in 377,000  fewer smokers. Further, Rs19 billion and Rs14 billion of additional revenue would be generated from a 30% and 40% increase, respectively. The policy note uses these assessments to make recommendations to Pakistan to improve its tobacco tax policies for the next fiscal year and beyond.