ISLAMABAD (07 May 2026) — Speakers at a policy seminar urged the government to adopt stronger and more consistent tobacco taxation as part of preparations for the Federal Budget 2026–27. Organised by the Sustainable Development Policy Institute, experts said tobacco taxation offers both public health benefits and significant fiscal gains for Pakistan.
Syed Ali Wasif Naqvi, Senior Research Associate at SDPI, highlighted analytical findings showing that even a one percentage point reduction in smoking prevalence could recover about Rs294 billion in economic losses and generate over Rs103 billion in additional tax revenue. He underlined that Pakistan currently lags behind recommended taxation benchmarks and called for an urgent review of the existing two-tier system to prevent industry manipulation and improve regulatory effectiveness.
Dr Sajid Amin Javed, SDPI Deputy Executive Director, described tobacco taxation as a win-win policy that can strengthen revenue generation while protecting public health. He recommended forming a working group of think tanks to lead public awareness campaigns and engage educational institutions on tobacco risks. He also urged that commonly consumed cigarette brands face higher taxation and that revenue be earmarked for health sector improvements, with special measures to curb youth smoking.
Waseem Iftikhar Janjua, SDPI Senior Advisor, criticised the two-tier tax structure as inequitable and counterproductive, noting that the gap between premium and economy brands encourages substitution rather than quitting. He proposed gradually increasing taxes on lower-tier brands and narrowing the gap with premium products to move toward a single-tier system, alongside automatic annual excise increases that outpace inflation and GDP growth within a three- to five-year reform roadmap.
Dr Ashar Malik of Aga Khan University warned that many alternative tobacco products, especially smokeless forms, escape adequate taxation due to regulatory gaps. He called for expanding taxation and legislation to include all forms of tobacco and for improving early diagnosis mechanisms for tobacco-related diseases such as lung and oral cancers. Experts also noted that Pakistan’s tax share on cigarette retail price remains below the World Health Organization Framework Convention on Tobacco Control recommendation of 70 percent.
Dr Irfan Chatha, SDPI Research Fellow, stressed that taxation must be paired with enforcement and institutional coordination to be effective. With consumption persisting at roughly 80 billion cigarette sticks annually, he urged a broader approach combining stronger tobacco taxation, action against illicit trade and alignment between federal tax powers and provincial health responsibilities following the 18th Amendment. He recommended reframing tobacco taxation as a core public health intervention rather than solely a revenue tool.
Speakers also called for targeted measures to protect young people, including mapping youth consumption trends, imposing higher taxes on products popular with youth and integrating tobacco awareness into youth development programmes. They urged limiting tobacco industry influence in policymaking and sought backing from international financial institutions such as the IMF and World Bank for stricter taxation policies to enhance both health outcomes and fiscal stability.
