Kerala’s new government Left Democratic Front’s (LDF) Finance Minister Thomas Issac introduced the revised budget for 2016-17 on 8th July to enhance social welfare schemes, public health and education. The government will increase tax revenues through nine scemes, which include introduction of a 14.5% ‘Fat-tax’ on burgers, pizzas, tacos, doughnuts, sandwiches, pasta, bread filing and burger patties and proposed five percent tax on certain packed foods. The budget expects the tax to add an additional Rs.10 crore to the state. Starting that the state was passing through a severe financial crisis due to various factors, the budget proposed an ‘anti-slowdown package’ of Rs. 12000 crore for taking up various development and infrastructure projects like roads, bridges and IT parks.
“This is more of a preventive measure as Kerala’s food habits are changing dramatically. People are eating a lot of junk food and rejecting traditional food,” says Finance Minister Thomas Isaac.
According to National Family Health survey, Northern state of Punjab has the most number of obese people and Kerala is in the second position. With increasing affluence, lifestyle diseases are on the rise and the government aims to check this with the fat tax.
Isaac Alexander, owner of a popular cafe in Kochi, says the “ambit of taxation is very narrow”. “A lot of local food is more fatty and unhealthy. I don’t think the tax is a bad thing but it has to be comprehensive and acceptable to all the stakeholders,” says Mr Alexander. “Otherwise it is discriminatory. Just because you serve pizza and burger doesn’t mean other people are serving healthy food.” This is a sentiment echoed by Annie Joseph, a self-professed fast food enthusiast. “We already pay a number of taxes. This [fat tax] will just add to that. Instead the government should promote health food and bring down their prices,” she says.
Mara Pandiyan, additional chief secretary at Kerala’s tax department said, “During the pre-budget discussions, we had asked the public for suggestions. They have been sending us mails to do something about fast foods, especially those run by branded multinational restaurants,” “The government acted on the suggestions. The idea was that if the government can’t force someone to stop selling pizzas or burgers in the state, why not introduce a disincentive in the form of a tax,” Pandiyan added.
Iqbal, a Kerala-based health activist said, “Kerala has one of the highest number of patients in the country when it comes to diabetes or hypertension. Many of these are related to lifestyle changes. Many of them (patients) are young. The seeds of such lifestyle habits are sown at a very young age,”
However, Kerala is not the first state to fix tax on junk food to increase tax revenue. Nitish Kumar-led Bihar government decided to charge a 13.5% VAT on samosas, salted peanuts, sweets and a few branded snacks to make up for the loss stemming from a ban on liquor sales from 1 April.
“The direct impact of this decision…will not be that high. But it will have to be seen whether other states would (do) something similar. If that happens, it will make a big impact,” said Abneesh Roy, associate director of institutional equities and research analyst at Mumbai-based Edelweiss Securities Ltd. “Also, the companies will pass on this increase partially or fully to the customer…, which may make the customer cut back on pizzas and burgers. In that sense, this will have an impact on the volume of such food products sold,” he said.
As a responsible citizen of Kolkata, I think some of the tax should be imposed on us as well or food lovers like me would never resist the high-calorie food such as biryani, amriti, kachuri-aloodum, pav-vaji, aloor chop, kobiraji cutlet, gajar ka halwa, badam laddoo, mughlai paratha etc.