‘Tobacco industry seeks tax cut amid rising health burden’

LAHORE: The government is learnt to have faced mounting pressure from the tobacco industry to concede to demands that could potentially reverse years of progress in tobacco control.

Cigarette manufacturers have ramped up lobbying efforts in recent weeks, seeking sweeping tax relaxations. Among the most concerning proposals is the introduction of a third-tier category of ultra-low-cost cigarette brands — a move seen by public health experts as a deliberate strategy to flood the market with cheaper tobacco products. The industry is pushing for a drastic cut in the current federal excise duty from Rs 5,050 to Rs 2,525 per 1,000 sticks for this new tier, sources said.

In addition, manufacturers are reportedly lobbying for a reduction in taxes on existing cigarette brands from Rs 5,050 to Rs 3,800 per 1,000 sticks — a step that would substantially lower retail prices, make cigarettes more accessible, and potentially increase the number of smokers across the country, the sources added.

“The industry’s focus, for now, appears to be more on reducing taxes across the board rather than introducing the third tier immediately,” said one source familiar with the ongoing lobbying.

Public health advocates have raised alarms that if such proposals are approved — particularly with IMF endorsement — it could cast serious doubts over the Fund’s commitment to Pakistan’s long-term health goals.

Commenting on the issue, Asif Iqbal, Managing Director at the Social Policy and Development Centre (SPDC), warned of grave consequences. “Pakistan has around 31 million adult tobacco users, including 17.3 million cigarette smokers. Tobacco use claims over 160,000 lives annually while draining 1.6% of the country’s GDP,” he said.

“If the government, with IMF approval, agrees to these regressive tax cuts, it would likely increase smoking prevalence, escalate the national death toll, and substantially raise healthcare spending. The ultimate burden will fall on the national exchequer,” Iqbal cautioned.

Copyright Business Recorder, 2025