Healthy Pakistan

Weeks before the announcement of the federal budget, the Ministry of Health has released a report that calls for imposing a 20 per cent health tax on numerous processed and ultra-processed food and drink products (UPPs), like bakery and confectionery items, in the 2025-26 budget. For items already subject to a 20 per cent federal excise duty (FED), the proposal is to increase it to 40 per cent in the next budget and potentially 50 per cent by 2028-29 to discourage unhealthy consumption. The report, titled ‘Sustainable Ultra Processed Food and Drinks Products Taxation Policy for Public Health’, recommends allocating the collected tax revenue for increased health spending to support the government’s ‘healthy Pakistan’ initiative. It also suggests adding new items to the FED list with a 20 per cent tax in the upcoming budget. Some of these products are sweetened milk components, processed meat products, confectionery, cereal-based products with additives, bakery items, jams, fruit purees, preserved foods, ice cream, flavoured yogurts, sauces, protein concentrates, puddings, baking improvers, artificial sweetener mixtures, and any other industrially processed food or drink with added fat, sweeteners or sodium.

The report highlights international trends and World Bank recommendations, adding that taxation should be used as a public health tool. It suggests that excise duty is the preferred method for taxing UPPs, which are defined as industrially formulated foods with additives. Conversely, the report recommends zero-rating unsweetened packed milk, plain bottled water, and packed fresh fruits and vegetables for excise duty and sales tax to promote healthier choices. The initiative in itself is good, but there is more to it. A blanket tax on all these products without affordable alternatives can create more problems for the government. Any increase in prices would mean a substantial decrease in the sale of many home-based bakeries and other grocery stores, which will create more chaos.

What the government can do is to ensure that the tax burden does not disproportionately affect lower-income households. There has been a visible surge in the number of mothers from working class backgrounds opting for powdered milk and related products for their children as their frail bodies fail to meet their infants’ dietary requirements. Any tax that hurts this segment of people will be futile and wrong. Clear communication and public awareness campaigns will be essential to educate consumers about the rationale behind the tax and the benefits of reducing their intake of UPPs, gradually convincing them to move towards healthier alternatives. Strict checks and regular evaluation will be required to assess the effectiveness of the policy and make necessary adjustments. The sentiments are great, but we will now see whether the government adopts a balanced approach to turn its dream of a healthier Pakistan into reality.