Are beverage companies influencing govt to avoid taxation?

KARACHI: Despite struggling to collect adequate taxes to run the country, the government is unwilling to increase taxes on Sugar-Sweetened Beverages (SSBs) under pressure from powerful companies, health experts alleged on Thursday, saying that despite an increase in taxes on all the consumer products, taxes on SSBs are not being enhanced since last three years.

“We have come to know that officials of beverage companies are misleading and influencing the authorities not to enhance taxes on sugary drinks. But it is well established that high consumption of sugary drinks is among the major cause of obesity, diabetes, heart diseases, a few types of cancers, liver and kidney diseases and tooth decay, and keeping these facts in mind, national and international bodies are urging Pakistani authorities to increase the federal excise duty on SSBs from 13 to 20 per cent in the budget for 2022-23 but unfortunately, these demands are falling on deaf ear”, said Prof. Abdul Basit, Secretary-General of Diabetic Association of Pakistan (DAP) while talking to The News.

Several other health officials in the capital confirmed to The News that officials of the beverage companies had several meetings with the finance minister and FBR officials and claimed that instead of obesity and diabetes, “stunting was Pakistan’s biggest health issue” and warned that if taxes on sugar drinks increased, it would flood the market with counterfeit medicines.

Prof. Abdul Basit, who has emerged as a strong proponent of enhancing sugary drinks in Pakistan, said the International Diabetes Federation (IDF) is urging Pakistan’s government for the last many years to increase excise duty on SSBs to 20 per cent and to broaden the category, beyond its current definition.

“There is a consensus among local and international health bodies that increased taxation on SSBs has proved to be an effective tool to combat weight gain and diabetes in Southeast Asia and the IDF Middle East & North African (Mena) Region”, Prof. Basit said but claimed that under the pressure from powerful beverage companies, the government was reluctant to increase tax on sugar drinks. The renowned diabetologist said the number of people living with diabetes in Pakistan has increased from 19.4 million in 2019 to 33 million in 2021.

“More than 10 million people are pre-diabetic in Pakistan and if no urgent policy action is taken, the number of people with diabetes will increase to 62 million by 2045. More than 400,000 deaths are attributed to diabetes or its complications. Nearly 1100 daily”, he informed.

According to IDF, he said the health expenditure to manage diabetes was estimated at $2640 million in Pakistan and added that in 2015, the cost of obesity was estimated to be Rs 428 billion by PIDE in Pakistan.

Earlier, the IDF’s President Dr Andrew Boulton and president-elect Dr Akhtar Hussain had also written a joint letter to Federal Health Minister Abdul Qadir Patel, pointing out that higher taxation on unhealthy products such as SSBs will help raise additional funding that can support programmes aimed at promoting healthier choices, and tackle the trend of obesity among the young.

They supported DAP’s request to increase excise duty on SSBs. “DAP wrote to you [Patel] on April 27 via its Secretary-General Prof Abdul Basit, a former IDF board member and trusted adviser on diabetes in Pakistan and other countries in the region,” reads the letter.

The IDF officials said that complications of diabetes are life-threatening, and put a huge burden not only on the individuals and families affected but also in economic terms at the local and national levels.

They said that with more than a third of adults in Pakistan being either obese or overweight, the risk of diabetes and other health problems is rising. “As we emphasised in our communication last year, the government is advised to give serious consideration to fiscal policies that reduce the consumption of goods detrimental to health and encourage citizens to make healthier choices.”

They said that the number of people with diabetes around the world has increased from 108 million in 1980 to 543 million today, making diabetes a globally leading cause of premature mortality.

“We estimate that diabetes was responsible for 63 million deaths in 2021, of which close to half could have been prevented through a healthy, balanced diet and regular physical activity, or delayed through early detection and intervention.”

They pointed out that the increasing availability of ultra-processed and sugary foods, along with reduced physical activity and higher incomes, which are often associated with the increased consumption of unhealthy foods, are all contributing factors.