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After Bihar’s samosa tax, Kerala slaps fat tax on junk food


The state has also imposed a green tax, to discourage use ofvehicles over10 years old

T E NARASIMHAN & GIREESH BABU Chennai, 8July The Bihar government’s decision in January this year to impose a tax on samosas and all sweets costing more than t500 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 govemment will levy a green tax on pub-lic and private vehicles over 10 years and 15 years old, respective-ly, Finance Minister T M Thomas Isaac said on Friday.

These measures are expected to fetch the state government t61,895.62 crore in revenue this financial year visàvis DIFFERENTAVATARS OF FAT TAX Taking a leaf out of toba cco’s bookto curb m a rket a ctivity th at gen elates negative externalities, m a ny govem m ents have introduced financial penalties known as fat tax, soda tax, sugartax and softdrinktax, etc. Some have had to with draw such measures after popular protests:

‘Metabo’ law involvesconcluding an annual waist measurement of people aged between 40 and 75, administered by companies and local authorities

Sales of sodas have d eclined by at least 10 per cent aftertax on carbonated drinkswas introduced despite lobbying and protests

It withdrew ‘fat tax’ and ‘soda tax’ after protestsfrom people

Sugary drinks are up to 3.5 per cent more expensive dueto soda tax

It has a geneml taxon all products made of refined sugar

A sugar taxon soft drinks is proposed to come into effect in 2018

Some cities have ‘soda tax’ a nd ‘sugartax’ but there is no pan-UStaxonfattening products

t53,003.42 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 per-centage 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.

After Bihar’s … The Kerala government, mean-while, 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 t50 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 110 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, MOO will be levied on private vehicles. Light transport vehicles will have to pay COO, when the fitness certificate is renewed. While, 1300 will be levied on medium transport vehcles, MOO 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 CO crore additional revenue, Kerala government sources said..

Source: Business Standard

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