Islamabad:- Pakistan’s tobacco industry is struggling with a serious challenge: the constant violation of the government’s fixed minimum legal price (MLP) for cigarettes. This issue is exacerbated by the proliferation of illegal cigarette brands below the MLP and the sale of some legal brands just above the minimum legal price, posing serious threats to health and economic agenda.
According to recent report approximately 54% of cigarette brands sold in the country are illegal. These illegal cigarette brands are causing an estimated annual tax revenue loss of over Rs. 300 billion to the national exchequer. These illicit cigarette brands lack the Track and Trace System (TTS) tax stamps and Government’s approved mandatory Graphic Health Warnings (GHWs), undermining regulatory efforts.
Government has fixed Rs. 162.25 as legal minimum price of a cigarette pack. But a recent research report has showed that out of 413 cigarette brands surveyed, alarmingly, 332 brands were found to be sold below the legal minimum price with some priced as low as Rs. 40.
While illegal brands blatantly violate pricing regulations, some legal brands are also contributing to the problem by pricing their products just above the Minimum Legal Price. This practice, although technically legal, increases the accessibility of tobacco products, particularly among youth and low-income populations. The affordability of these products undermines public health initiatives aimed at reducing smoking prevalence in the country. In 2023, Philip Morris International CEO, Mr. Jacek Olczak had stated that ”Cigarettes belong in museums”, however, in Pakistan Philip Morris continues to sell cigarettes almost as low as the Minimum Legal Price making it easily accessible to low income segments. Such actions in low income countries are designed to increase the incidence of smoking and not only prove detrimental to tobacco control efforts but are also in stark contrast to the stated global position of Philip Morris International. The economic impact of the smuggled and tax evaded cigarettes trade in Pakistan is profound. With the legal cigarette industry’s market share declining from 63% in 2022 to 44% in 2024, the government’s revenue from tobacco taxes is significantly compromised. This loss hampers the funding of essential public services and health programs.
From a health perspective, the increased accessibility and affordability of cigarettes contribute to higher smoking rates. Pakistan already faces a significant health burden from tobacco use, with over 100,000 tobacco-related deaths annually. The prevalence of smoking among youth is particularly concerning, as early initiation increases the likelihood of long-term addiction and associated health complications.
In order to mitigate the adverse effects of the illicit cigarette trade and the sale of low-priced legal brands, a multifaceted approach is necessary. The government must increase monitoring and enforcement of existing laws and regulations, particularly at retail points, to ensure compliance with Track and Trace and Graphical HEAKLTH Warning requirements.
Additionally, it is important to reevaluate the Minimum Legal Price (MLP) and increased MLP to discourage the sale of low-priced cigarettes, reduce accessibility, reduce consumption and lower health consequences.
Increasing the floor price for cigarettes is crucial for safeguarding public health and securing economic stability. Through concerted efforts involving strict enforcement, policy adjustments and public awareness, Pakistan can combat the challenges posed by the cigarette industry and promote a healthier future for its citizens.
