SPDC proposes 37% increase in tobacco tax

The Social Policy Development Centre (SPDC) in Pakistan has put forward a proposal to increase the Federal Excise Duty (FED) on tobacco products by 37 percent. This initiative aims to not only save lives but also generate additional revenue and assist in smoking cessation efforts. The proposal is in line with recommendations from the World Health Organization (WHO) and the Campaign for Tobacco Free Kids (CTFK), highlighting its significance in promoting public health.

Currently, Pakistan operates on a two-tiered system for FED on cigarettes, with varying rates for different tiers. The proposed increase in FED rates is intended to further boost revenue collection and enhance public health outcomes. Past adjustments in tax rates have already demonstrated positive results, with revenue hitting Rs122 billion by January 2024.

The SPDC's proposal targets a tax share of retail prices reaching 70 percent by adjusting FED rates for economy and premium brands. This strategic move not only aims to increase revenue but also contribute to reducing smoking rates and potentially covering a significant portion of healthcare costs associated with smoking-related illnesses in Pakistan.

The proposed increase in FED on tobacco products by the SPDC is a crucial step towards improving public health outcomes, reducing smoking rates, and boosting government revenue. By aligning with global recommendations and building on past successes, Pakistan is poised to make significant strides in addressing the challenges posed by tobacco consumption.