 "After Bihar's samosa tax, Kerala slaps fat tax on junk food")
The Bihar government’s decision in January this year to impose a tax on samosas and all sweets costing more than Rs 500 per kg must have given a lot of food for thought to the new government in Kerala.
The Left Democratic Front (LDF), elected to power in May, has decided to impose a “fat tax” on junk food, as it looks to increase tax revenue by 25 per cent this financial year.
At 14.5 per cent, the fat tax is expected to hit fast-food chains in the state, including KFC, McDonald’s, Domino’s, Pizza Hut and Subway. These are popular with non-resident Indians and tourists in the state, who, the government believes, are in a position to absorb the tax.
Additionally, the state government will levy a green tax on public and private vehicles over 10 years and 15 years old, respectively, Finance Minister T M Thomas Isaac said on Friday.
These measures are expected to fetch the state government Rs 61,895.62 crore in revenue
this financial year vis-a-vis Rs 53,003.42 crore last year, the minister said. However, the growth in tax revenue is only about 17 per cent, tax experts said, implying there is still a deficit of eight percentage points in comparison to its overall target of 25 per cent.
The fat tax, in particular, government sources say, is intended to check obesity, a trend rapidly gaining ground in the state. A 2010 study by Vivekananda High School, Bellary, stated that among high school students in the state’s capital, Thiruvananthapuram, almost 12 per cent were overweight, while 6.3 per cent were obese.
Thomas specified that food items, including pizzas, burgers, tacos, doughnuts, sandwiches, pasta and burgers, sold in upscale restaurants would fall under the fat tax ambit.
It may be noted that fat tax had been imposed by countries such as Denmark and Hungary earlier to fight obesity. Denmark chose to scrap it eventually, after losing the war on growing girth.
The Bihar government, in January, had imposed a 13.5 per cent value added tax on items such as samosas, salted peanuts, sweets and a few branded snacks, to make up for the revenue loss on account of the ban on liquor in the state.
The Kerala government, meanwhile, also imposed a five per cent tax on packaged wheat products such as atta, maida, sooji and rava. The state government is expecting additional revenue of around Rs 50 crore from this initiative alone, sources said. Tax for packaged Basmati rice has also been increased to five per cent, which is expected to bring Rs 10 crore into government coffers.
Coconut oil, imported into the state, and washing soaps will become expensive by five per cent; so will garments, which will see a levy of two per cent. The new green tax comes in the wake of the National Green Tribunal Circuit Bench’s decision in May to ban diesel vehicles 10 years and above in the state, with a capacity of 2,000 cc. At the time of renewal of registration, Rs 400 will be levied on private vehicles. Light transport vehicles will have to pay Rs 200, when the fitness certificate is renewed. While, Rs 300 will be levied on medium transport vehicles, Rs 400 on heavy transport vehicles at the time of renewal of fitness certificate.
For goods vehicles of over 20,000 kilos in weight, tax will be increased by 10 per cent, after a gap of nine years. This will bring in Rs 20 crore additional revenue, Kerala government sources said..
The Left Democratic Front (LDF), elected to power in May, has decided to impose a “fat tax” on junk food, as it looks to increase tax revenue by 25 per cent this financial year.
At 14.5 per cent, the fat tax is expected to hit fast-food chains in the state, including KFC, McDonald’s, Domino’s, Pizza Hut and Subway. These are popular with non-resident Indians and tourists in the state, who, the government believes, are in a position to absorb the tax.
Additionally, the state government will levy a green tax on public and private vehicles over 10 years and 15 years old, respectively, Finance Minister T M Thomas Isaac said on Friday.
These measures are expected to fetch the state government Rs 61,895.62 crore in revenue
this financial year vis-a-vis Rs 53,003.42 crore last year, the minister said. However, the growth in tax revenue is only about 17 per cent, tax experts said, implying there is still a deficit of eight percentage points in comparison to its overall target of 25 per cent.
The fat tax, in particular, government sources say, is intended to check obesity, a trend rapidly gaining ground in the state. A 2010 study by Vivekananda High School, Bellary, stated that among high school students in the state’s capital, Thiruvananthapuram, almost 12 per cent were overweight, while 6.3 per cent were obese.
Thomas specified that food items, including pizzas, burgers, tacos, doughnuts, sandwiches, pasta and burgers, sold in upscale restaurants would fall under the fat tax ambit.
It may be noted that fat tax had been imposed by countries such as Denmark and Hungary earlier to fight obesity. Denmark chose to scrap it eventually, after losing the war on growing girth.
The Bihar government, in January, had imposed a 13.5 per cent value added tax on items such as samosas, salted peanuts, sweets and a few branded snacks, to make up for the revenue loss on account of the ban on liquor in the state.
The Kerala government, meanwhile, also imposed a five per cent tax on packaged wheat products such as atta, maida, sooji and rava. The state government is expecting additional revenue of around Rs 50 crore from this initiative alone, sources said. Tax for packaged Basmati rice has also been increased to five per cent, which is expected to bring Rs 10 crore into government coffers.
Coconut oil, imported into the state, and washing soaps will become expensive by five per cent; so will garments, which will see a levy of two per cent. The new green tax comes in the wake of the National Green Tribunal Circuit Bench’s decision in May to ban diesel vehicles 10 years and above in the state, with a capacity of 2,000 cc. At the time of renewal of registration, Rs 400 will be levied on private vehicles. Light transport vehicles will have to pay Rs 200, when the fitness certificate is renewed. While, Rs 300 will be levied on medium transport vehicles, Rs 400 on heavy transport vehicles at the time of renewal of fitness certificate.
For goods vehicles of over 20,000 kilos in weight, tax will be increased by 10 per cent, after a gap of nine years. This will bring in Rs 20 crore additional revenue, Kerala government sources said..
| DIFFERENT AVATARS OF FAT TAX Taking a leaf out of tobacco’s book to curb market activity that generates negative externalities, many governments have introduced financial penalties known as fat tax, soda tax, sugar tax and soft drink tax, etc. Some have had to withdraw such measures after popular protests: |
|