In a bid to address public health concerns, the Ministry of Health has proposed the introduction of a 20% health tax on processed and ultra-processed food and drink products (UPPs) as part of the upcoming budget for FY2025-26, The News reported.
This proposal, which includes bakery and confectionary items, is part of a larger strategy aimed at discouraging the consumption of unhealthy foods and drinks while generating additional revenue for health spending.
The proposal, shared in a report titled “Sustainable Ultra Processed Food and Drinks Products Taxation Policy for Public Health,” outlines an incremental increase in taxes over the next few years.
The report suggests raising the Federal Excise Duty (FED) on items already subject to a 20% rate to 40% in the 2025-26 budget, with the tax rate potentially rising to 50% by 2028-29.
The report also recommends expanding the scope of taxed items to include a wide range of processed foods, such as sausages, confectionery (including chewing gum, chocolates, and caramels), bakery products, cereal-based items, jams, and frozen desserts, among others. These items, which are high in sugars, fats, and preservatives, would be subject to an increased FED, with the goal of promoting healthier dietary choices among consumers.
Additionally, the report suggests that unsweetened milk, plain bottled water, and fresh fruits and vegetables be exempt from excise duty and sales tax to encourage healthier alternatives. The government’s focus on health taxation comes amid a growing global trend, with countries like Colombia and Saudi Arabia adopting similar measures in response to rising health issues linked to processed foods.
The Ministry has pointed out that these taxes could lead to a reduction in the consumption of ultra-processed foods and drinks, which are linked to several health problems such as obesity, diabetes, and cardiovascular diseases.
