ISLAMABAD: With more than 1,100 people dying daily due to diabetes and its complications, and over 300 limbs amputated each day, Pakistan is facing a severe health crisis but the beverage industry is negotiating with the Pakistani finance minister and chairman of the Federal Board of Revenue (FBR) to escape taxes aimed at improving public health.
Leading civil society organizations and health professionals have strongly rejected these tactics, stating they are not in the best interest of the Pakistani people or the country’s economy.
In a joint statement issued on Tuesday, these organizations urged the government to reject any investment plans by the beverage industry under the guise of rural economy and export benefits, which ultimately burden the health sector and the economy.
In 2023, the finance ministry, on the proposal of the Ministry of National Health Services, Regulations and Coordination, decided to increase the Federal Excise Duty (FED) on juices and other sugary drinks to 20% to reduce consumption and alleviate the devastating effects on public health, leading to increased hospital expenditures.
This decision was widely appreciated by Pakistani civil society, health professionals, and the international community. Former finance minister Ishaq Dar had committed during the 2023 budget session to further increasing these taxes to 40% in the best interest of Pakistan’s health.
“The cost of managing diabetes in Pakistan rose to more than $2,640 million in 2021. Sugary drinks and juices are major risk factors for diabetes, heart diseases, cancer, kidney failure, and other chronic conditions,” said Munawar Hussain, Consultant at Global Health Advocacy Incubator. “The annual cost of managing diabetes is double what Pakistan requests from the IMF annually. Research shows that a 30% risk of diabetes is attributed to the increased consumption of sugary drinks and juices,” he added.
Several national and international organizations, including the International Diabetes Federation, Diabetic Association of Pakistan, Pakistan National Heart Association, Heartfile, Pakistan Kidney Patient Welfare Association, Family Physicians Association, and Pakistan Medical Association, have requested the government to maintain and further increase the FED to 50% on all types of sugary drinks to reduce the disease burden and save lives.
The beverage industry faces lower taxes in Pakistan compared to many countries regionally and globally. For instance, Saudi Arabia, Qatar, Oman, UAE, and other Gulf states have imposed a 50% excise duty on sodas and 100% on energy drinks. Even India has a higher tax on the beverage industry, including a 40% total tax. The Maldives has imposed a $2.25 per liter levy on beverages. Over 100 countries and states globally have already imposed high taxes on sugary drinks to discourage consumption due to their public health consequences.
“While the Pakistan government is taking several measures to stabilize the economy, increasing the tax on sugary drinks is an evidence-based and sensible strategy to reduce the disease burden and generate significant revenue for the country,” said Sana Ullah Ghumman, General Secretary of the Pakistan National Heart Association.
Referring to a World Bank modeling study, he stated, “If the government increases the federal excise duty on all sugary drinks to 50%, it will result in health gains of 8,500 DALYs, an economic value of $8.9 million to public health, and $810 million in average annual tax revenue over the next ten years.”
Squadron Leader (R) Ghulam Abbas, General Secretary of the Pakistan Kidney Patient Welfare Association, appealed to the finance minister and prime minister to prioritize public health over corporate interests by increasing taxes on sugary drinks, including sodas, energy drinks, juices, iced teas, flavored milk, and squashes.
“The beverage industry uses various tactics to misguide policymakers to oppose tax increases on sugary drinks. Research from Mexico, South Africa, and Peru shows that taxing sugary drinks reduces consumption of unhealthy beverages while increasing the consumption of healthier alternatives like bottled water and unsweetened milk.
Research confirms that taxes on sugary drinks have no net negative impact on the economy or employment in countries that have increased these taxes,” he added.