ECONOMIC IMPLICATIONS OF CIGARETTE TAXATION IN PAKISTAN: An Exploration through A CGE Model
The macroeconomic impacts of tobacco taxation is an under-researched subject in Pakistan. The lack of empirical evidence often leads to an inflated perception of the size and contribution of the tobacco industry to the economy. This study analyzes the macroeconomic and distributional impacts of the change in tobacco use prevalence resulting from a change in tobacco taxes in Pakistan. Using a methodology based on computable general equilibrium (CGE) modeling, the study estimates the impact of tax increases on tax revenues, consumption of tobacco products, raw tobacco production, cigarette manufacturing, employment, and the overall economy.