Pakistan Approves Higher Sweetened and Sugary Beverage Tax

Obesity and non-communicable diseases (NCDs) have become a growing concern in Pakistan. With 41.3% of adults being overweight or obese, and 6 out of 10 deaths attributed to NCDs, there is an urgent need for government interventions. To address this, the Global Health Advocacy Incubator’s (GHAI) partner the Pakistan National Heart Association (PANAH) engaged and built a diverse coalition of organizations and advocates to successfully campaign for a stronger sugar-sweetened beverages (SSB) tax, which was passed this February as a part of the country’s 2023 Supplementary Finance Bill. The new policy, effective March 1, 2023, increases the existing excise tax on carbonated beverages from 13% to 20% and established a new 10% tax on fruit juices, syrups and squashes. Syrups and squashes, popular in Pakistan, are thick and viscous liquids with high amounts of sugar used to make a drink by adding water.

The rise in obesity and NCDs in Pakistan has become a significant public health challenge. Pakistan has the 3^rd highest number of people living with diabetes globally, increasing from 6.3 million in 2011 to 33 million in 2021. If no immediate policy action was taken, this number was set to increase to 62 million by 2045. This is having an enormous impact on the country’s public health expenditures, as the annual cost of managing diabetes increased to more than $2.6 billion USD in 2021.

PANAH led an advocacy campaign and implemented various activities to increase support for the SSB tax, including building a coalition, engaging media, conducting rallies, writing joint letters to the Prime Minister, Finance Minister, Chairman Federal Board of Revenue and several policy makers and holding a blog competition to highlight the harms of the industry and the need for the tax. The coalition partners, including PANAH, Diabetic Association of Pakistan, International Diabetes Federation, National Commission on the Rights of Children, Ministry of National Health Services, Regulations and Coordination and Federal Tax Ombudsman, also amplified the voices of credible health professionals and championed parliamentarians to push for the tax. GHAI provided invaluable support to PANAH throughout the campaign, assisting in research dissemination, helping brief high level policy makers and communications support ranging from digital advocacy training to messaging. In addition, GHAI worked with PANAH to help counter the fierce industry opposition.

To create a national conversation on the need for the tax, PANAH educated over 200 journalists about the issue, who wrote more than 1,000 articles. The news stories highlighted public support (78% of Pakistani adults) for increasing taxes on SSBs to reduce obesity and NCDs. The coalition hashtag #TaxSugarDrinksNotFuel trended on Twitter during a critical moment in the advocacy campaign. The coalition partners also published a joint appeal in national newspapers and engaged in high level meetings and technical discussions with key policy makers.

Advocates met significant opposition, as there had already been significant influence exerted by the beverage industry over the policy making process. Several politicians in the Senate standing committee on finance aligned with beverage industry interests by recommending halving the Federal Excise Duty (FED) on juices. Unexpectedly, diplomatic channels were used by the beverage industry to pressure the government, including from the commercial consulate of the United States Embassy in Pakistan.

Despite this, PANAH and its coalition partners secured a key victory in the fight to combat diet-related NCDs. While this was an important step, there is a need for improvement in the tax rates to cover all SSB categories. There may be opportunities with the 2023-24 finance bill, set to be presented and voted in the parliament in June 2023, and followed by a health contribution bill that earmarks SSB tax revenue toward health programs. The coalition partners will continue to counter industry opposition and strengthen and expand their partnerships to include more champions. GHAI will continue to support PANAH in their effort to amplify the voices of the youth, health professionals, parliamentarians, economic experts, religious leaders and civil society through earned and digital media to secure a healthier future for all Pakistanis.

Investment plan for Pakistan economy at the cost of killing People?

A much needed tax requested by civil society which could save lives in Pakistan.

A country with more than 1100 people dying daily due to diabetes and its complications, the beverage industry is offering $200 million investments to Pakistani Finance Minister for not imposing new taxes. The civil society of Pakistan and health professionals rejects such tactics of the beverage industry which is not a good investment plan for Pakistan economy at the cost of killing people ie building a tremendous burden on the health sector and hence, economy of the country.

“As per International Diabetes Federation (IDF), the cost of management of diabetes has increased to more than $2640 million in Pakistan in 2021. Sugary drinks are among the major risk factors of diabetes, and other NCDs (non communicable diseases)” stated Prof, Abdul Basit, Secretary General, Diabetic Association of Pakistan (DAP). “IDF has recently written a letter to policy makers in Pakistan, requesting to increase federal excise duty on all type of sugary drinks to reduce the diseases burden and saving precious lives” he added.

The beverage industry has low taxes in Pakistan as compared to many countries regionally and globally. For example, Saudi Arabia and other gulf states have imposed 50% excise duty on sodas and 100 % on energy drinks. Even India has a higher tax on beverage industry than Pakistan which includes 28% sales tax and 12 % services a goods tax. More than 80 countries across the globe has already imposed high taxes on sugary drinks to discourage their consumption due to consequences on public health. The low taxes are encouraging the beverage industry to direct their investments to Pakistan creating serious threats to public health and economy of the country.

“While Pakistan government is facing a serious financial crunch, increasing 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 Program at Global Health Advocacy Incubator. While referring to the modelling study done by the World Bank, he said “If government increases 50% federal excise duty 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 the next ten years” The sugar density based tax or health levy are also proved to be effective design of tax to reduce the diseases burden and generating revenue” he said.

Mr. Sana Ullah Ghumman, General Secretary Pakistan National Heart Association appealed to Finance Minister and Prime Minister of Pakistan for giving priority to Public health over the corporate interest by increasing tax on sugary drinks including sodas, energy drinks, juices, iced teas, flavored milk and squashes. “The beverage industry uses many tactics to misguide the policy makers 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 but increase the consumption of heathier alternatives like bottled water and unsweetened milk. Research confirmed that tax on sugary drinks have no net negative impact on economy or on the joblessness in the countries those who increased the taxes. We fully support any proposal by FBR to increase federal excise duty or levy on sugary drinks which increases the price to minimum of 20% to consumers from the current prices”. he added.