Pakistan proposes 20% health tax on ultra-processed foods, beverages in FY2025-26 budget 

PAKISTAN – Pakistan’s Ministry of Health has proposed the introduction of a 20% health tax on processed and ultra-processed food and beverage products as part of the upcoming budget for the 2025–26 fiscal year.  

The move forms part of a broader public health strategy intended to discourage the consumption of unhealthy foods while generating additional revenue for healthcare spending. 

Outlined in a report titled “Sustainable Ultra Processed Food and Drinks Products Taxation Policy for Public Health,” the proposal recommends incremental increases to the Federal Excise Duty (FED) over the next few years.  

The ministry suggests raising the existing FED on items currently taxed at 20% to 40% in FY2025–26, with a further increase to 50% by FY2028–29. 

The proposed tax would apply to a wide range of processed items, including sausages, confectionery such as chewing gum, caramels, and chocolates, bakery goods, cereal-based products, jams, and frozen desserts.  

These products are typically high in sugars, fats, and preservatives, which are linked to a growing number of non-communicable diseases including obesity, diabetes, and cardiovascular conditions. 

According to the report, “Every new or additional health taxation measure should aim at providing double public health benefits of reduction in consumption of unhealthy food and drinks and, at the same time, generating more revenue to provide fiscal space for more health spending to promote the Healthy Pakistan initiative of the government.” 

Specific recommendations include raising the FED on sugary fruit juices, syrups, squashes, and flavoured waters—excluding mineral and aerated water—from the current 20% to 40% in FY2025–26, and to 50% by FY2028–29.  

A similar increase is proposed for aerated drinks containing added sugar, sweeteners, or flavouring agents. 

The report also suggests that the Ministry of Health maintain comprehensive records of tax revenue collected through these measures and that health expenditure be proportionately increased based on the revenue gains. 

Pakistan’s proposed policy aligns with a growing global trend in health taxation, with countries like Colombia and Saudi Arabia implementing similar levies in response to rising health challenges associated with ultra-processed food consumption. 

The Ministry emphasized that the initiative is not solely about revenue generation but is aimed at promoting healthier dietary habits and reducing the long-term burden of diet-related illnesses in the country. 

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