The Ministry of Health has proposed a comprehensive health taxation policy targeting processed and ultra-processed food and beverage products in the upcoming 2025–26 federal budget.
The policy recommends imposing a 20 percent Federal Excise Duty (FED) on a wide range of bakery and confectionery items, while doubling the existing 20 percent FED on specific products—such as sugary drinks and juices—to 40 percent. The duty is expected to gradually increase to 50 percent by fiscal year 2028–29 to further discourage the consumption of unhealthy foods.
The proposal includes maintaining detailed records of tax revenue generated through these measures, with a corresponding increase in health spending to support the government’s “Healthy Pakistan” initiative. The dual objective is to reduce public consumption of harmful food products while simultaneously generating additional funds for healthcare investment.
The report, titled “Sustainable Ultra-Processed Food and Drinks Products Taxation Policy for Public Health,” was shared with the Ministry of Finance and the Federal Board of Revenue as part of budget planning. It also suggests adding new items to the FED list, including processed meats, sweetened dairy products, breakfast cereals with additives, jams, jellies, ice cream, chips, flavored yogurts, frozen desserts, and a range of pre-packaged sauces.
These products would be taxed at an initial rate of 20 percent in the next budget cycle.
