FED cut for beverage industry in budget likely

FED cut for beverage industry in budget likely

KARACHI: The government is seriously considering to bring down federal excise duty (FED) from existing 13 percent to 11.5 percent in the upcoming budget 2021/2022.

According to sources the tax authorities had received instructions to finalize proposals regarding beverage industry for reducing the rate of FED from 13 percent to 11.5 percent.

The FED rate on aerated waters, containing added sugar or other sweetening matter or flavored was increased to 13 percent from 11.5 percent through Finance Act, 2019.

It is interesting to note that Finance Minister Shaukat Tarin in a meeting last week with the delegation of the representatives of the Beverage Industry of Pakistan, said although he is supportive of adopting measures that can boost the industrial development, generate employment and help in expansion of businesses; any decision, regarding the taxation/ relief provided to any industry which has direct linkages with general well being and health of the public, will be taken after a careful analysis of all the facts and arguments.

The Diabetic Association of Pakistan (DAP) in a recent press conference presented alarming rise of diabetic patients in the country due to growing demand for sugar.

Therefore, the association demanded the authorities to double the taxes on sugar-sweetened beverages (SSBs) in the coming budget 2021/2022.

It said diabetes is growing at an alarming rate in Pakistan, which has the 4th highest burden of type 2 diabetes worldwide with more than 19 million cases.

The association demanded the government to increase the FED to 20 percent in the upcoming budget in order to discourage use of beverages.

“Unfortunately, beverages are becoming an increasingly essential part of household food consumption with more than a 10 per cent point increase in the last few years along with a gradual increase in production and decrease in the price,” according to a letter sent to the FBR by the association.

Health experts warned that diabetes was growing at an alarming rate in the country, and as per 2nd National Diabetes Survey of Pakistan 2016-17, every 4th Pakistani adult is suffering from type 2 diabetes.

“Overweight and obesity are key risk factors leading to early development of diabetes. According to the Non-communicable Disease (NCDs) Steps Survey (2014-15), more than four out of ten adults of Pakistan are obese or overweight, while 37 per cent have hypertension,” according to the survey.

WHO and the World Bank also recommended Pakistan for increasing taxes on beverages to reduce obesity and related diseases like diabetes.

The association demanded increase in FED to 20 percent, and create a category of beverages to include sugary drinks beyond aerated water (juices, energy drinks, flavored milk, iced tea, nectars etc.) to impose minimum of 20 per cent excise tax.

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