Despite the government's efforts to curb tobacco consumption through price increases, a recent study has revealed a significant shift towards cheaper, tax-evaded cigarette brands, undermining public health initiatives and revenue collection.
In this regard, 89% of the respondents of a survey acknowledged that their consumption did not decrease despite the price hike, with 80% opting for cheaper brands, while 71% of the people of Pakistan recently changed their current cigarette brand. A staggering 67% of the people shifted to illegal (tax-evaded) cigarette brands due to cheaper prices, whereas only 33% continued to consume tax-paid cigarettes.
The study, titled 'The Impact of Cigarette Price Increase on Smoking Behavior & Patterns', conducted by Umeed-e-Sehar, an organization working for promoting public health initiatives and improving the well-being of communities across Pakistan, combines quantitative analysis and qualitative insights gathered from a sample of 1,698 smokers out of a total sample size of 2,000 individuals, along with a survey of 60 retailer shops in cities, including Mardan, Hyderabad, Multan, Faisalabad, Sahiwal and Gujranwala.
The study disclosed that the 154% increase in federal excise duty on cigarettes to put them out of the reach of consumers has failed to produce results. Higher taxes have increased the tendency to switch from expensive brands to readily-available cheaper alternatives, which is the opposite of the government’s intentions.
As per the survey, 87% of retailers confirmed increased demand for cheaper, non-tax-paid cigarettes due to the price increase, while 83.5% reported the absence of tax stamps on cigarette packs, indicating widespread tax evasion.
The FED increase has caused variations in the price distribution of cigarette brands, leading the majority of respondents to opt for cheaper tax-evaded illicit cigarette brands, as 62.4% of respondents reported using brands priced between Rs80 and Rs120.
"The findings are a wake-up call for policymakers," said Muzammil Sheikh, chief executive officer of Umeed-e-Sehar. "While well-intentioned, the price hike has inadvertently fueled the growth of the illicit cigarette trade, undermining both public health goals and government revenue."
"Tackling the illicit cigarette trade is crucial for realizing the potential revenue from the tobacco sector and safeguarding public health. Failure to act will only perpetuate this vicious cycle, jeopardizing the well-being of our nation," he added.
"Efforts to reduce smoking should be coupled with combating illicit trade, as strengthening enforcement can lead to a healthier, tobacco-free society in Pakistan,” he added.
