Pakistan has aggressively pursued fiscal consolidation through various tax hikes, yet tobacco taxation has been notably excluded from these efforts. Despite prevailing fiscal pressures and critical public health concerns, the Federal Excise Duty (FED) on cigarettes has been frozen for the third consecutive year, including in the Finance Bill 2026. Because high inflation has severely eroded the real value of this specific tax, cigarettes have become increasingly affordable over time, directly undermining both government revenue generation and national tobacco control goals. This ongoing tax freeze sharply contradicts international best practices – which advocate for regular tobacco tax increases that outpace combined inflation and income growth – thereby resulting in profound negative implications for Pakistan’s economic revenue and healthcare outcomes.
