Kerala imposes 14.5% 'fat tax' on junk food

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The Kerala government, headed by Pinarayi Vijayan  has introduced a “fat tax” of 14.5% on foods like burgers, pizzas and doughnuts along with other junk foods in branded restaurants in a bid to discourage the junk food culture. The announcement was done in the first budget of LDF government in Kerala presented by Finance Minister Dr. T.M. Thomas Issac.

The state government’s decision to ban liquor in 2014 has caused a major hit on the government’s finances and subsequently led to the estimated debt burden of Rs 1, 53,759 crore so Kerala is facing major revenue crunch.The revised state budget for 2016-17 expects the Fat tax will add an additional Rs.10 crore to the state coffers. 

‘Fat tax’ is something that is prevalent in certain foreign countries like France, Denmark and Hungary but is largely an alien term in India. Earlier this year the Bihar government, who also imposed a liquor ban, tried to bridge the gap by imposing 13.5 percent tax on food items like samosas, kachauri and branded snacks. But, the move was met with resistance for the beginning. 

Impacts of 'fat tax' :

  • Fast-food chains like McDonalds, Dominos, Pizza Hut, Subway among others are likely to see a hit on their sales as they would be forced to up the prices and pass on the burden to consumers which may make the customer cut back on pizzas and burgers. 
  • Two studies conducted earlier in the state pointed towards rising obesity levels amongst children in the state so the tax will discourage junk food and play some role in healthy lifestyle of people.

Fat tax : A fat tax is a tax or surcharge that is placed upon fattening food, beverages or on overweight individuals. A fat tax aims to decrease the consumption of foods that are linked to obesity. It is similar to the sin tax imposed on items such as alcohol or tobacco to discourage their consumption.

The state government has also imposed 5 percent tax on packaged wheat products, packaged basmati rice and coconut oil. Disposable plastic glasses are also set to be costlier with a steep 20 percent tax imposed.

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