Health activists aim to stall beverage industry’s bid to escape taxation

ISLAMABAD: Health activists have opposed the beverage industry’s bid to avoid more taxes by offering an investment plan of $200 million to the government, saying that the proposed investment to help Pakistan’s frail economy would be “at the cost of killing people”.

Quoting a study commissioned by the World Bank, the activists suggested that taxes should be imposed on sugary drinks to boost revenue and reduce diabetes.

The World Bank said that taxing the industry would generate at least $810 million in annual tax revenue for the next 10 years.

They said that as per International Diabetes Federation (IDF), the cost of management of diabetes increased to more than $2,640 million in Pakistan in 2021.

Say $200m investment offered by industry is at ‘cost of killing people’

According to a statement issued by the Pakistan National Heart Association (Panah), more than 1,100 people were dying every day due to diabetes and related complications.

“The civil society of Pakistan and health professionals reject such tactics of the beverage industry which is not a good investment plan for Pakistan’s economy…[as it puts] tremendous burden on the health sector and hence, the economy,” it stated.

“As per International Diabetes Federation (IDF), the cost of management of diabetes has increased to more than $2,640 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 for the Diabetic Association of Pakistan (DAP).

“IDF has recently written a letter to policymakers in Pakistan, requesting [government] to increase federal excise duty on all type of sugary drinks to reduce the diseases’ burden and save precious lives” he added.

The beverage industry has low taxes in Pakistan as compared to many countries, he added.

Citing the example of Saudi Arabia and other gulf states, he said they have imposed 50pc excise duty on sodas and 100pc on energy drinks.

Even India has a higher tax on the beverage industry than Pakistan which includes 28pc sales tax and 12pc services a goods tax, he added.

“More than 80 countries across the globe have 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 the economy of the country,” the statement claimed.

“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,” Food Policy Program at Global Health Advocacy Incubator Consultant Munawar Hussain said.

While referring to the modelling study conducted by the World Bank, the consultant said, “If the government increases 50pc federal excise duty on all sugary drinks, it will bring health gain of 8,500 disability-adjusted life years (DALYs); economic value of $8.9 million to public health;

and $810 million [in] average annual tax revenue for the next 10 years.”

Panah General Secretary Sanaullah Ghumman urged Prime Minister Shehbaz Sharif and Finance Minister Ishaq Dar for giving priority to public health over corporate interest. He sought an increase in tax on sugary drinks, including flavoured milk and squashes.

“The beverage industry uses many tactics to misguide the policymakers to oppose an increase in taxes on sugary drinks. Research from Mexico, South Africa, and Peru shows that taxing sugary drinks will reduce the consumption of unhealthy beverages and increase the consumption of healthier alternatives, like bottled water and unsweetened milk.

“Research confirmed that tax on sugary drinks has no net negative impact on the economy…in the countries which increased the taxes. We fully support any proposal by the FBR to increase federal excise duty on sugary drinks which increases the price to a minimum of 20pc,” he said.

Talking to Dawn, Mr Ghumman said he had requested the government to impose taxes on tobacco and sugary drinks instead of generating revenue by imposing a levy on essential items, like petrol, electricity, gas, and flour.

“There are very few in comparison. In the United Kingdom, the price of a pack of cigarettes is 17 pounds, which is equivalent Rs3,800, while its price in Pakistan is less than 100 rupees,” he claimed, adding that the prices of sugary drinks were also low in Pakistan compared to other countries.

Published in Dawn, February 5th, 2023