The Economic Burden of Tobacco Use in Pakistan

Tobacco use remains one of the most significant public health and economic challenges in Pakistan, impacting millions of lives and putting undue pressure on the country’s already fragile healthcare system. Despite ongoing efforts to curtail its use, tobacco consumption continues to rise, especially among the youth and low-income groups. This not only exacerbates health problems but also places an enormous economic burden on Pakistan in terms of healthcare costs, productivity losses, and societal well-being.

A Public Health Crisis

In Pakistan, more than 24 million adults—roughly 19% of the adult population—use some form of tobacco, according to the Pakistan Demographic Health Survey. The prevalence of smoking alone is estimated at around 15%, but when other forms of tobacco such as smokeless tobacco (SLT) are factored in, the figures become even more alarming. Tobacco-related diseases, including cancer, cardiovascular diseases, and respiratory conditions, contribute significantly to Pakistan’s already high disease burden. According to the World Health Organization (WHO), tobacco use is the leading cause of preventable deaths, accounting for more than 160,000 deaths annually in the country.

The Direct and Indirect Costs of Tobacco Use

The economic burden of tobacco use is often underestimated but encompasses both direct and indirect costs. The direct costs refer to the healthcare expenses associated with treating tobacco-related diseases, while the indirect costs are associated with lost productivity due to illness and premature death.

Direct Costs

Healthcare costs associated with treating diseases caused by tobacco use are staggering. Studies estimate that the annual healthcare costs of treating tobacco-related illnesses in Pakistan amount to PKR 143 billion (around $900 million). This includes hospitalization, medication, surgery, and long-term treatment, placing a heavy financial strain on both the public healthcare system and individuals who bear out-of-pocket expenses.

In a country where healthcare infrastructure is already overstretched, tobacco-related diseases further strain the limited resources. Hospitals and clinics, particularly in rural areas, lack adequate facilities to treat patients with chronic conditions like cancer, heart disease, and respiratory illnesses—many of which are linked directly to tobacco use.

Indirect Costs

The indirect economic burden of tobacco use is just as significant. Lost productivity due to illness, absenteeism, and premature deaths imposes a severe cost on Pakistan’s economy. It is estimated that the country loses around PKR 153 billion ($970 million) annually due to lost productivity. The premature deaths of thousands of working-age adults from tobacco-related diseases deprive families of their primary earners, contributing to the cycle of poverty and economic instability.

Moreover, tobacco users often face reduced work performance due to their declining health, and frequent absenteeism means businesses face reduced output and economic losses. These factors cumulatively hamper Pakistan’s economic growth and development potential.

Tobacco and Poverty: A Vicious Cycle

One of the key social dimensions of the tobacco epidemic in Pakistan is its disproportionate impact on low-income groups. For many families living below the poverty line, spending on tobacco competes with basic necessities like food, education, and healthcare. Studies have shown that poorer households spend a significant portion of their income on tobacco products, exacerbating their economic vulnerabilities.

In rural areas, where tobacco use is particularly prevalent, the money spent on cigarettes and smokeless tobacco often diverts household resources from essential needs, further deepening the cycle of poverty. The economic cost of tobacco use thus becomes a double-edged sword—reducing both individual health and family economic well-being.

Lost Tax Revenue: The Paradox of Tobacco Taxes

While tobacco taxation is often touted as a key tool in reducing tobacco consumption, the situation in Pakistan is more complex. The government collects substantial revenue from tobacco taxes—roughly PKR 150 billion ($950 million) annually. However, this revenue pales in comparison to the economic costs of tobacco use, which far exceed the tax gains. The net economic loss due to tobacco use is a staggering PKR 300 billion ($1.9 billion) annually, making it clear that the revenue generated from tobacco taxes does not offset the overall economic burden.

The challenge is further exacerbated by the existence of a large illicit tobacco trade in Pakistan. Illicit cigarettes evade taxes, undermining the effectiveness of tobacco control policies and resulting in a significant loss of government revenue. It is estimated that the illicit cigarette market constitutes over 40% of the total market in Pakistan, causing a revenue loss of nearly PKR 77 billion annually.

Policy Solutions and the Way Forward

Addressing the economic burden of tobacco use in Pakistan requires a multi-faceted approach. The government has already made strides through tobacco taxation, but these measures must be bolstered by stricter enforcement, particularly against illicit trade. Furthermore, public health campaigns must be intensified to raise awareness about the harmful effects of tobacco use, particularly among youth and vulnerable populations.

The government, in collaboration with civil society and international organizations, should also work to implement comprehensive tobacco control policies that include plain packaging, larger graphic health warnings (GHWs), and stricter bans on tobacco advertising. Programs aimed at helping tobacco users quit, such as smoking cessation programs and nicotine replacement therapies, must be made widely available and affordable.

Conclusion

The economic burden of tobacco use in Pakistan is unsustainable, with healthcare costs and lost productivity far outweighing any tax revenue generated. The social costs are equally severe, with poor households bearing the brunt of this crisis. While progress has been made in tobacco control, much more needs to be done to reduce tobacco use and its devastating effects on health and the economy. A concerted effort involving policymakers, health professionals, and communities is crucial to overcoming this challenge and building a healthier, more prosperous Pakistan.

This article is written by Radma Nouman. Radma is a research analyst at IMARAT Institute of Policy Studies (IIPS).