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The analysis of fiscal policies of the government is an important determinant of looking at priorities related to development and public interest. Well-structured fiscal policies can reduce health sector challenge. My career as a Specialist dealing with the diagnosis and treatment of the heart diseases and helping development and heading institution like Armed Forces Institute of Cardiology- National Institute of Heart Diseases (AFIC-NIHD), involved in heart disease prevention advocacy for general public through Pakistan National Heart Association (PANAH) and heading this organization for nearly a decade, has provided me the opportunity to look closely at the miseries of people. It also helped me understand deeply that how fiscal policies impact common people of our country at large. The finance bill 2021 is close to be finalized and is expected to go to Parliament soon. It is high time to help government functionaries like Federal Board of Revenue (FBR), Ministry of Finance and political leadership to identify policies which may be very useful to reduce miseries of people and provide double advantage to the government. One of such policies is to increase tax apart from Tobacco and its products, on sugar sweetened beverages (SSBs). We shall discuss the significance of increasing tax on SSBs in this article and its associated challenges.

Non-communicable diseases (NCDs) are a major threat to health systems globally with no exception to Pakistan. As per the World Health Organization (WHO), 58% of total deaths are contributed by NCDs, including heart diseases, in our country. In other words, approximately 2200 people die every day due to these deadly diseases in Pakistan. According to NCDs Steps Survey of Pakistan (2014-15), more than four out of ten adults (41.3%) are obese or overweight, while 37% have hypertension. Similarly, every 4th adult (26%) is suffering from type 2 diabetes as per second National Diabetes Survey of Pakistan conducted in 2016-17. According to the International Diabetes Federation 2019, Pakistan has the 4th highest burden of type 2 diabetes worldwide with more than 19 million cases. The impact of this high burden of obesity and related NCDs is evident. It results in increased mortality and morbidity, healthcare costs and productivity losses, which ultimately impacts the economy of the country. According to a study by the Pakistan Institute of Development Economics (PIDE) in 2015, almost 16% of the country’s total health budget was spent on the management of diseases related to overweight and obesity as a direct cost which makes almost 0.4% of the GDP. The estimates of indirect cost of overweight and obesity are 1.9% of the country’s GDP, which is huge and calls for immediate action from the government.

High consumption of SSBs is one of the major causes of obesity and related NCDs like heart disease, hypertension, diabetes, liver and kidney diseases, some types of cancers, and tooth decay. SSBs are any liquids that are sweetened with various forms of added sugars like brown sugar, corn sweetener, corn syrup, dextrose, fructose, glucose, high-fructose corn syrup, lactose, malt syrup, maltose, molasses, raw sugar, and sucrose. SSBs can include products ranging from sodas to flavored milk and are unfortunately a significant proportion of total fluid intakes in children and adolescents replacing healthier beverages such as plain milk and water. It is worth mentioning that as per the Pakistan Soft Drink Market Digest 2019, Pakistanis spend nearly ‘Rs 525 billion’ annually on the purchase of three main categories of these unhealthy drinks: carbonated beverages, energy drinks, and juices. The consumption of these SSBs is growing, which is resulting in increased rates of obesity and related diseases in the country. As per the National Nutrition Survey 2018, the number of overweight children has doubled in the country as compared to 2011. Similarly, the percentage of obese and overweight women of reproductive age has increased to 38% in 2018 as compared to 28% in 2011. These figures are daunting and indicate the need for an immediate policy shift from government.

To reduce health care costs and NCDs, it is important to discourage the consumption of these SSBs. Raising taxes on SSBs is an evidence-based first step to reduce obesity and disease burden of related NCDs, and increase revenue for the country. The evidence from India, South Africa, Mexico, Australia and some other countries confirms the effectiveness of increasing taxes on SSBs to reduce consumption and contribute to a reduction in obesity and related diseases. For example, the modeling studies conducted in India in 20141 indicated that a 20% increase in tax on SSBs led to a 3% reduction in obesity and overweight and a 1.6% reduction in type 2 diabetes. SSBs are not an essential food item and have limited or no nutritional value but can contribute to many harmful health conditions. The WHO and World Bank recommend tax increase on SSBs to raise their retail price by at least 20% as a part of strategy to reduce obesity and related NCDs.

The existing tax rate on these beverages in Pakistan is much lower than neighbouring countries such as India where it is 40% (12% goods and services tax plus 28% GST), Maldives $2.18/L (almost equal to Pak Rupees 335 per liter), etc., and many African and the Middle Eastern countries such as Saudi Arabia, Qatar, the UAE and Oman with 50% tax on sweetened drinks and 100% excise tax on energy drinks, etc. The beverage industry in Pakistan like other countries of world resist high taxes with an argument that high taxes may cause joblessness of people serving in the industry and overall taxes revenue may reduce. The global evidence does not support this argument at all. The recent studies from Mexico, Chile, South Africa and other countries have findings that taxes can help dampen demand for SSBs and shift demand to healthier alternatives like bottled water etc. There is no net change in employment due to substitution and offsetting effects. The higher taxes also motivate progressive industry to focus on transforming to healthier alternatives instead of resisting and continue promoting unhealthy sugary drinks. I am aware that beverage industry adopts collusive approaches to resist the high tax and threatened government for reducing or halting new investments. It is important for the policy makers to understand these negative approaches of the industry and keep their nerve strong. The policy decisions must be in the favour of our own people and we should be brave enough to take stand against such tactics of the industry. If any investment is spreading diseases and causing increased number of deaths in the country, we must refuse that as ultimately our economic losses will be higher than the benefits and revenue generated.

The Finance Bill 2021-22 is about to be finalized, so it is high time for Pakistan to increase tax on SSBs to reduce the disease burden and increase revenue. There is strong public support for the government increasing taxes on SSBs to reduce obesity and related NCDs. Pakistan Health Research Council has recently conducted a nationally-representative opinion poll in 2021 in collaboration with Pakistan National Heart Association to gauge public support for increasing taxes on SSBs. The opinion polldata5 shows that nearly 78% Pakistani adults support increasing taxes on SSBs. More than 8 out of 10 of Pakistani adults support the government taking steps to discourage consumption of SSBs. The Pakistani public want the government to take action to protect the health of the people and the nation.

In order to reduce the burden of non-communicable diseases in the country, the Federal Board of Revenue and Ministry of Finance should consider increasing the federal excise duty on SSBs minimum to 20%. In addition, it is important to include all SSBs in the product definition for the FED including carbonated beverages, aerated water, juices, energy drinks, flavored milk, iced tea, nectars, etc., to maximize the benefit. A proposal in this regard has already been submitted by Health Ministry to FBR and Finance Ministry. This increase in FED, if happened will be a strategic initiative which can save thousands of lives and protect the population from these deadly diseases. This will also help the Government achieve the Sustainable Development Goals of wellbeing and prevention of NCDs. In short, increasing the tax on SSBs is a win-win situation for government and will help to reduce the disease burden and increase much-needed revenue.

(The writer is a cardiac

surgeon, medical

educationalist, administrator & ex-Commandant Armed Forces Institute of Cardiology - National Institute of Heart Diseases (AFIC-NIHD). Presently,

he is President Pakistan National Heart Association & Chairman PANAH Trust)

Prof Maj-Gen Masud Ur Rehman Kiani (retd)

Copyright Business Recorder, 2021

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