Budget 2026–27: Cigarette FED Freeze Costs Lives and Revenue
Islamabad, July 03 2026 – The Society for the Protection of the Rights of the Child (SPARC) highlighted that the decision not to increase the Federal Excise Duty (FED) on cigarettes in the Federal Budget 2026–27 resulted in a missed opportunity to protect public health particularly children and youth and to generate an estimated Rs. 51 billion in additional annual revenue.
Dr. Khalil Ahmad, Program Manager at SPARC, stated that an estimated Rs. 51 billion in additional annual revenue was forfeited due to the failure to increase cigarette taxes. Citing analysis by the Social Policy and Development Centre (SPDC), he noted that raising the Federal Excise Duty by Rs. 35 per pack on economy brands and Rs. 21 per pack on premium brands could have delivered significant public health benefits. These include preventing 369,000 youth from initiating smoking, reducing the number of smokers by 271,000, and saving an estimated 279,000 lives overall comprising 185,000 youth lives and 95,000 adult lives.
He further stated that Federal Excise Duty (FED) rates on cigarettes have remained unchanged since February 2023, leading to a decline in the tax share of retail cigarette prices and increased affordability particularly of low cost brands that disproportionately attract children, youth, and low income groups. He added that a formal proposal for increasing cigarette taxes was shared ahead of the Budget 2026–27, presenting a critical opportunity to prevent children and youth from initiating smoking; however, this opportunity was unfortunately missed.
Dr. Khalil Ahmad further added that tobacco use continues to pose a major public health crisis in Pakistan, causing more than 192,000 deaths annually, or nearly 526 deaths every day. He noted that the economic burden of smoking related diseases is estimated at Rs. 1,835 billion in 2024–25, which far exceeds the Rs. 266 billion collected in tobacco taxes during the same period.
He said that Pakistan continues to have some of the lowest cigarette prices in the region due to stagnant tax rates and declining real taxation. He warned of an alarming rise in tobacco use among children and youth, noting that cheaper cigarettes disproportionately attract younger populations. He emphasized that higher tobacco taxes are among the most effective measures to prevent smoking initiation among children and youth, as global evidence consistently shows that price increases significantly discourage smoking in these age groups.
Dr. Khalil Ahmad added that the decision not to increase cigarette taxes will have serious negative implications for both public health and revenue generation, undermining national commitments to reduce tobacco use and protect future generations.
