In a move set to impact everyday consumers, the Pakistani government is proposing a significant tax increase on processed food items in the upcoming fiscal year 2025-26 budget. The plan aims to generate an additional Rs. 150 billion in revenue by raising taxes on popular snacks and sweets, including biscuits, cakes, chips, chocolates, and pastries.
The Federal Board of Revenue (FBR) has suggested increasing the federal excise duty on sweetened beverages, such as soft drinks and juices, from the current 20% to 40%. Additionally, a new 20% tax is proposed on industrially produced dairy products, encompassing items like packaged milk, yogurt, and cheese.
Processed meat products, including sausages and smoked meats, are also expected to face higher taxes. Bakery and confectionery items—such as chewing gum, candies, chocolates, caramels, pastries, and cornflakes—may see tax hikes of up to 50% over the next three years. nt’s efforts to broaden the tax base and meet revenue targets set by the International Monetary Fund (IMF). While officials argue that the measures aim to promote healthier consumption habits, industry stakeholders warn of potential inflationary effects and reduced consumer purchasing power.
The final decisions regarding these tax proposals will be unveiled in the federal budget presentation scheduled for June.
