ISLAMABAD – About 50 percent increase in cigarettes prices could lead to the same amount of reduction in its demand in Pakistan as majority of smokers would prefer to quit instead of switching to other brands, reveals a modern research study.
The study “Switch, Reduce or Quit: How do smokers respond to tobacco tax increases in Pakistan,” carried out by Pakistan Institute of Development Economics in Islamabad yesterday.
The study finds that increase in prices would help reduce cigarette consumption, adding that higher the prices, higher the reduction will be.
It shows that only nine percent of cigarette users would opt to switch, while the rest would either opt to quit or to reduce their cigarette consumption. Of the nine percent who would switch, around 15 percent of users intend to switch to non-tobacco products. Hence, effectively the switching rate across brands and other tobacco products is only seven percent.
The findings that cigarette affordability facilitates smoking and that smokers do not switch to other brands or products – along with the fact cigarette prices are significantly lower than the smokers’ willingness to pay – make a compelling case for effective tobacco taxation policies.
The tobacco excise taxes as a proportion of prices are much lower than the 70 percent minimum suggested by the WHO. The taxes should be increased at least to this threshold to have a meaningful impact on reducing cigarette consumption in Pakistan.
A recent survey shows that higher the percentage increase in price, lower the number of people who would continue to smoke. The stated preferences by smokers for different price hikes result in an inverse relationship between price and demand for cigarettes, it said.
There is a plenty of room for significant increases in tobacco taxes, it said.
The market survey shows that prices of even top brands in Pakistan are almost three times lower than the MWTP of cigarette consumers, this demonstrates how low the price of cigarettes is in Pakistan.