In face of the need to broaden our tax net, the government imposed a flat 20% Federal Excise Duty (FED) on fruit juices beverages (100% fruit juices, nectars, and juice drinks) in efforts to bridge taxation revenue shortfalls. However, this view misses the forest for the trees, not taking into account the myriad impacts of increased taxation upon the juice beverages industry. Hence, rather than bolster the national exchequer, the decision has instead triggered a cascade of counter-productive outcomes, adversely affecting both the economy and public health.
Let us quickly review the highlights: since the implementation of the 20% FED on fruit juices in June 2023, the formal packaged juice beverages industry has experienced a staggering decline in volume by more than 40%. Rather than invigorating the economy, the government’s step has destabilized on of the country’s taxpaying sectors, with turnover and investments both in the billions of rupees, and endangered the employment of 100,000 people across its value chain. In a business environment riddled with challenges, from continually rising inflation to the constant presence of economic instability and ever-rising costs of doing business, it is essential that the government find ways to bolster those industries that are making positive contributions to the national exchequer.
Instead, the negative repercussions of this regressive tax have been far-reaching and damaging not just to the fruit industry, but to the country’s .