Consequences Of Imposing ‘Sin’ Tax On Cigarettes – Benefit Or Detriment?

Consequences Of Imposing ‘Sin’ Tax On Cigarettes – Benefit Or Detriment?

On 4th December 2018, Health Minister Amir Kayani said that the federal government was looking forward to impose gunah (sin) tax on cigarettes, tobacco and soft drinks. According to him, the government will earn billions of rupees through taxes and will spend the same on the health sector thereby improving it.

As interesting as this may sound, there are going to be consequences faced by the government and the public. Starting off with the pros of this decision, it must be noted that imposing ‘sin’ tax will not only boost our health sector but will also be a channel for the government to earn billions of rupees meant to be spent on the health sector itself. It is said that almost 45 countries have levied ‘sin’ tax on harmful substances. A leading example is India which has imposed such taxes on substances like pan masala and gutka.

It seems like a great initiative for boosting our country’s health sector as well but it must be noted that including soft drinks under this tax reflects uncertainty.

Every action that has pros has certain cons as well. The first and foremost possible negative aspect of this sin tax will be the rise in illicit cigarette trade, which is a more severe issue than the act of smoking itself. This was the only reason that the Federal Board of Revenue (FBR) had lowered the taxes on several cigarette brands and had reduced the Federal Excise Duty on those cigarette packs in the budget of fiscal year 2017-2018. While the government has ensured that it is going to take all the necessary measures to prevent such activities, who will be held responsible if such things flourish?

Secondly as far as the term ‘gunah tax’ is concerned, it certainly has negative connotations in the sense that it may seem to contradict with Article 21 of Constitution of Pakistan which provides safeguards against taxation for the purposes of any particular religion in the following words:

“No person shall be compelled to pay any special tax, the proceeds of which are to be spent on the propagation or maintenance of any other religion other than its own.”

By calling it ‘gunah’ tax, it may appear that the government is telling people that the use of tobacco is a sin for the Muslim community (debatable), while appearing as an additional tax towards non-Muslim communities.

Furthermore, we cannot ignore political repercussions. A casual statement tweeted by Mr Faisal Vawda has also attracted political criticism:

“I’m a chain cigarette smoker myself and I appreciate all the measures taken by the government to discourage smoking and I understand it’s injurious to health but this term “gunah tax” is inappropriate. If this is gunah then what would we name and term the actual gunahs?”

Here the point is not the imposing of the tax, but the use of term itself. Mr Asad Hafeez, Director National Health Services (NHS), also tried to explain ‘sin’ tax in the following words:

“A sin tax is an internationally recognised term and is specifically levied on certain goods deemed harmful to society, for example tobacco, candies, soft drinks, fast foods, coffee and sugar.”

If we take this statement into account, we may interpret it in different ways. Substances like candies and sugar are not exactly “harmful”. Even if they are deemed to be harmful, they are not damaging our bodies in the same way as substances like alcohol or drugs are. But if the statement is strictly construed, candies, coffee and sugar may well be on the list of being imposed with ‘sin’ tax.

Imposing ‘sin’ tax also undermines freedom to choose in a way as everyone has the right to make a choice and that’s why we also have designated smoking areas almost everywhere. As far as soft drinks are concerned, we have been using them since a very long time. Students tend to consume a lot of soft drinks as they can afford them with their pocket money. Imposing a tax on them will not prevent people from consuming them.

While imposing a tax on cigarettes might boost our health sector, the term ‘gunah’ tax makes things uncertain and vague and imposing it on all kinds of everyday products provides no reasonable grounds and may have social, economic, moral and political repercussions at the end of the day.


The views expressed in this article are those of the author and do not necessarily represent the views of or any other organization with which she might be associated.


Note: ‘Sin’ tax is imposed on producers who consequently raise the price of the product for consumers. In case consumer demand for that product is highly inelastic, demand will not decrease much even if price is raised, thereby benefiting the producer and having very little effect on consumption. In effect, while this may raise revenue for the government, it may not act as a barrier for the producer nor deter people much from using the same products at a higher price.

Neelam Khatian

Author: Neelam Khatian

The writer is a Barrister-at-Law.