High tobacco taxes alone not enough

Pakistan stands at a decisive moment in its struggle against tobacco use. As a signatory to the World Health Organization’s Framework Convention on Tobacco Control (FCTC), the country has committed itself to using price and tax measures to reduce tobacco consumption, as outlined in Article 6.

The evidence supporting this approach is overwhelming: higher tobacco taxes are among the most effective tools for reducing smoking, preventing youth initiation, and lowering tobacco-related disease.

Yet in Pakistan, as in several other countries, the promise of tobacco taxation has not been fully realized. The reason is simple but often overlooked—higher taxes do not automatically translate into higher prices or lower affordability.

Much of the policy debate in Pakistan revolves around tax rates and revenue collection, but this focus can be misleading. What matters for public health is not how much tax is levied on paper, but whether cigarettes become meaningfully more expensive for consumers.

International experience shows that a high tax share of the retail price does not guarantee reduced smoking if cigarettes remain cheap in absolute terms. Bangladesh offers a striking example where taxes account for more than 80 percent of the retail price of cigarettes, a figure that would appear exemplary by global standards.

Yet cigarettes in Bangladesh are still widely affordable, especially in lower price segments, and smoking prevalence remains high. The low base price of cigarettes has allowed even very high tax shares to coexist with easy access to tobacco.

Türkiye presents another cautionary case. Cigarette taxes there also exceed 80 percent of the retail price, and yet smoking prevalence remains above 30 percent, one of the highest rates in the region. Over time, income growth, inflation, and incomplete transmission of tax increases to retail prices have eroded the real impact of taxation.

Cigarettes did not become decisively less affordable, even as tax rates rose. The result has been a persistence of high smoking rates despite decades of tobacco control efforts.

These experiences are highly relevant for Pakistan. Cigarettes in Pakistan remain among the most affordable in South Asia. A pack can still be purchased for a trivial share of daily income, making smoking economically painless for many users. Periodic tax increases have raised nominal prices, but these increases have often been offset by income growth, inflation, and industry pricing strategies.

The persistence of a multi-tier tax structure has further weakened the impact of taxation by allowing manufacturers to shift production and marketing toward lower-taxed brands, ensuring that very cheap cigarettes remain widely available.

FCTC Article 6 does not merely call for higher taxes; it calls for effective price and tax measures that reduce tobacco consumption. This distinction is crucial. Taxes that are absorbed by manufacturers, diluted by tiered systems, or eroded by inflation fail to meet the spirit of Article 6, even if they generate revenue.

Effective taxation must ensure that tax increases are reflected in retail prices and that these prices rise faster than income over time. Without this, cigarettes remain affordable, and consumption patterns change little.

Pakistan’s tobacco policy must therefore move beyond symbolic compliance and toward substantive reform. The goal should not be to achieve an impressive tax share statistic, but to make cigarettes genuinely expensive and progressively less affordable. This requires a tax system that is simple, predictable, and resistant to manipulation.

Uniform specific excise taxes, applied equally across all brands, are far more effective than complex tiered systems. Equally important is ensuring that tax increases are fully passed on to consumers, particularly in the lowest-priced segments of the market where price sensitivity is highest.

Inflation and income growth must also be taken seriously. One-off tax hikes may produce temporary reductions in affordability, but their impact quickly fades if taxes are not regularly adjusted.

Automatic indexation of tobacco taxes to inflation and income growth is essential to preventing cigarettes from becoming cheaper in real terms over time. Without such mechanisms, even well-intentioned tax reforms will fail to deliver lasting public health benefits.

The stakes could not be higher. Tobacco use imposes enormous costs on Pakistan’s healthcare system and economy, while inflicting preventable suffering on millions of households.

The burden falls disproportionately on low-income families, where spending on cigarettes diverts resources away from food, education, and healthcare. High tobacco taxes, when properly designed and implemented, are among the most pro-poor public health interventions available to the state.

Pakistan still has an opportunity to learn from international experience. Bangladesh shows that high tax shares mean little if cigarettes remain cheap. Türkiye shows that high taxes alone cannot overcome affordability if price increases do not outpace income growth.

FCTC Article 6 points toward a clearer path—one that prioritizes real price increases and sustained reductions in affordability.

If Pakistan is serious about protecting public health, it must ensure that tobacco taxes do what they are meant to do. Raising tax rates is necessary, but not sufficient.

Cigarettes must become increasingly expensive, increasingly unaffordable, and increasingly out of reach. Anything less risks turning tobacco taxation into a technical exercise rather than a life-saving policy.

Copyright Business Recorder, 2026