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Cigarette price hike fuels Illicit trade, undermines public health efforts in Pakistan

New Study Reveals Unintended Consequences of Tax Increase on Smoking Behavior

03:34 PM | 22 May, 2024
Cigarette price hike fuels Illicit trade, undermines public health efforts in Pakistan
Source: File Photo

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.

89% respondents of the survey acknowledged that their consumption did not decrease despite the price hike, with 80% opting for cheaper brands. 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 & Gujranwala. 

The study disclosed that the 154% increase in federal excise duty on cigarettes to put out these of 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.

87% of retailers confirmed increased demand for cheaper, non-tax-paid cigarettes due to the price increase. 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, 62.4% of respondents reported using brands priced between 80 and 120 rupees. 

"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.

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Currency Rates in Pakistan - PKR to US Dollar, Euro, Pound, Dirham, Riyal - 21 June 2024

Pakistani rupee rates against US Dollar and other currencies on June 21, 2024 (Friday) in open market.

USD to PKR Rate Today

US dollar was being quoted at 277.6 for buying and 280.75 for selling.

Euro's buying rate stands at 297 and selling rate is 299.5 while British Pound rate is 350.5 for buying, and 354 for selling.

UAE Dirham AED was at 74.80 and Saudi Riyal at 72.75.

Forex Rates

Currency Symbol Buying Selling
US Dollar USD 277.6 280.75
Euro EUR 297  299.5 
UK Pound Sterling GBP 350.5  354 
U.A.E Dirham AED 74.80  75.6
Saudi Riyal SAR 72.75 73.5
Australian Dollar AUD 181.2 183
Bahrain Dinar BHD 740.91 749.18
Canadian Dollar CAD 203.5 205.5
China Yuan CNY 38.4 38.8
Danish Krone DKK 40.11 40.51
Hong Kong Dollar HKD 35.68 36.03
Indian Rupee INR 3.34 3.45
Japanese Yen JPY 1.9 1.98
Kuwaiti Dinar KWD 907.62 916.62
Malaysian Ringgit MYR 59.07 59.67
New Zealand Dollar NZD 170.98 172.98
Norwegians Krone NOK 28.83 29.13
Omani Riyal OMR 723.62 731.62
Qatari Riyal QAR 76.53 77.23
Singapore Dollar SGD 202 204
Swedish Korona SEK 26.68 26.98
Swiss Franc CHF 315.08 317.58
Thai Bhat THB 7.59 7.74

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