Friday March 24, 2023

MNCs planning to prevent proposed increase in taxes on sugary drinks: experts

February 05, 2023

In a country where more than 1,100 people are dying daily due to complications of diabetes, while hundreds are getting their lower limbs amputated, multinational companies are offering a few hundred million dollars’ investment in a bid to prevent the authorities from raising taxes on sugary drinks, leading health experts and diabetologists warned on Saturday.

A report carried in The News on Saturday said that with the first round of technical level talks with the IMF completed, there is another proposal for raising the Federal Excise Duty rate on sugary beverages up to 17 per cent from the existing rate of 13 per cent through a proposed mini-budget. However, the report said, “the FBR has been facing immense pressure from the diplomatic corps in this regard. Another aspect is that sugar is being used in these beverages so the sweetener owners who enjoy political connections irrespective of political divide will also make last-ditch efforts to block this proposal at any stage.”

Health experts said that the beverage industry was trying to give “a lollypop of $200 million investments” to the country for not jacking up the taxes. The civil society rejects such tactics which are meant to play with the health of people of Pakistan and building a tremendous burden on the health sector and the economy of the country, they said.

“As per international diabetes federation (IDF), the cost of management of diabetes increased to more than $2,640 million in Pakistan in 2021. Sugary drinks are among the major risk factors of diabetes, heart diseases, liver and kidney diseases and various types of the cancers,” said Prof Dr Abdul Basit, general secretary of the Diabetic Association of Pakistan (DAP).

“IDF has recently written a letter to policymakers in Pakistan, requesting an increase in the federal excise duty on all type of sugary drinks to reduce the disease burden and saving precious lives,” he added.

He said the beverage industry has low taxes in Pakistan as compared to regional countries and many other countries in the world. For example, he noted, Saudi Arabia and other Gulf states have imposed a 50 per cent excise duty on soda drinks and a 100 per cent duty on energy drinks, and even India has a higher tax on the beverage industry than Pakistan, i.e. a 28 per cent sales tax and a 12 per cent services goods tax. The low taxes are encouraging the beverage industry to direct their investments to Pakistan, creating serious threats to public health and the economy of the country, Prof Basit said.

“While Pakistan government is facing a serious financial crunch, increasing the tax on sugary drinks is a sensible strategy to not only reduce the diseases burden but also generate significant revenue in the best public interest,” said by Munawar Hussain, consultant food policy programme at the Global Health Advocacy Incubator.

Referring to the modelling study done by the World Bank, he said: “If the government increases the federal excise duty by 50 per cent on all sugary drinks, it will bring health gain of 8500 DALYs, economic value of USD 8.9 million to public health and USD 810 million average annual tax revenue for next ten years.”

The sugar density-based tax or the health levy is also proved to be an effective design of tax to reduce the disease burden and generate revenue,” he said.

Sana Ullah Ghumman, general secretary of the Pakistan National Heart Association, appealed to the finance minister and the prime minister of Pakistan for giving priority to public health over the corporate interest by increasing the tax on sugary drinks. “The beverage industry uses many tactics to misguide the policymakers to oppose taxes increase on sugary drinks.

The research from Mexico, South Africa and Peru shows that taxing sugary drinks will reduce the consumption of unhealthy beverages and increase the consumption of heathier alternatives like water and unsweetened milk. Research confirmed that taxes on sugary drinks have no net negative impact on the economy or on joblessness in those countries which increased the taxes, he added.