The Finance Act 2022 raised FED on cigarettes by an average of 12.5%, but the increase fell short of the recommended 30% benchmark. SPDC’s analysis shows that despite higher rates, producer price hikes reduced the excise share in retail price from 45.9% to 40.9%, leaving cigarettes more affordable than two years ago. The reform is expected to cut consumption by 4.5%, generate PKR 13.5 billion in additional revenue, and encourage 380,000 smokers to quit, but stronger measures could have doubled both fiscal and health gains.
