Kerala's move to up tax on health drinks flayed

The budget proposal to hike tax on health drinks to 20 per cent from 12.5 per cent by the Kerala government has prompted the Confederation of Indian Food Trade and Industry (CIFTI) to urge the administration to take a relook at the move.

Terming the budget proposal as 'taxing on health', CIFTI president P S Mukherjee, who was on a visit to the state capital to persuade the state government to have a rethink in this regard, said that, "the government has misclassified health drinks under the luxury items list for value-added taxation, along with washing machines and refrigerators".

Pointing out that even jewellery, which clearly is a luxury item, has been taxed very much lower than health drinks at 12 per cent, Mukherjee said the stance of the government might be termed as an anomaly.

Mukherjee told Business Standard that the CIFTI had taken up the matter with state finance minister Isaac Thomas and was hopeful of a positive response in this regard. Answering a query, he said that he would also persuade the state health minister in this regard as the issue involved health drinks.

With state's position as a milk-deficient state, health drinks have long been appreciated and consumed as a nutritional supplement for fresh milk.

Various factors point to the fact that health drinks have a place next to the essential items such as coffee, tea and sugar, Mukherjee added.

The move to raise the tax on health drinks and attempts to get the neighbouring states too to follow suit would prove to be bad for the consumer as manufacturers would not have any other option but to hike prices, he opined.

Adding that a tax hike of this magnitude would also push down production and sale of health drinks in this part of the country, he said that it would also result in revenue loss for the state.