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Eateries Mull Legal Action Against Kerala’s Fat Tax



There’s Fat Chance of Restaurants Taking Kerala Tax Lying Down

Restaurant Association calls proposed 14.5% fat tax on junk food discriminatory and irrational, says will seek legal recourse if the state government implements it

Our Bureau

New Delhi: The National Restaurant Association of India plans to seek legal recourse if the Kerala government levies a controversial fat tax that’s been proposed on junk food sold in some restau-rants in the state.

“We will take legal action if the tax is implemented,” NRAI president Riyaaz Amlani said. The industry body, which represents global and local restaurants across the country, has sent a detailed, written representation to the Kerala government. “We have said that this is completely irrational and we will oppose it. If it comes into passing, we will oppose it legally as well,” said Amlani, who owns Smoke House Deli and Social.

FOOD FOR THOUGHT Restaurant industry is estimated to contribute close to 2.1% to the country’s GDP by 2021. It will pay 22,400 crore in taxes this year

Kerala finance minister Thomas Isaac on July 8 proposed levying a 14.5% fat tax on junk food, including pizzas, burgers, pasta and dough-nuts, sold in branded restaurants. Kerala is the first Indian state to consider imposing such a tax. Industry estimates suggest there are at least 50-60 organised restaurant chains in Kerala, including global brands such as McDonald’s, Burger King, Pizza Hut, Domino’s and Subway.

Amlani, who heads hospitality chain Impresario Entertainment, said the proposed tax was highly discriminatory and discretionary.

“We are definitely not going to take this lying down…We’re going to oppose it. There’s no scientific basis for this. I don’t think the government will be pro taxing the regional, local players. It will not hold up in court,” he said.

Multinational chains have alleged that the tax singles them out and won’t help in limiting fat intake. “This could trigger similar moves in other states. It is very unfair on us,” the chief executive officer of a leading restaurant chain said.

Amlani spoke at the release of the NRAI’s annual Food Services Report 2016, which said the food service industry is undergoing key transitions with the emergence of new themes, concepts and cuisines. However, challenges including manpower quality, high attrition, real estate costs and high taxation are road-blocks to industry development, the NRAI said.

The restaurant sector will contribute 222,400 crore in taxes and create 5.8 million direct jobs this year, but the organised sector accounts for only 33% of this market, it said.

Amlani attributed the limited contribution of the organised sector to over-regulation, a complex maze of approvals and licences and high tax brackets. “It is about time our industry’s socioeconomic impact is recognised by the government and it initiates immediate steps to unlock its potential,” he said.

The restaurant industry is estimated to contribute close to 2.1% to the country GDP by 2021.

“Key trends emerging in the space include virtual kitchens, stores at travel hubs such as airports, rail-ways and highways, ordering-in and food trucks,” the report said.

“India’s exponential growth and consumption in terms of frequency of eating out and experimentation with cuisines and concepts have given the F&B services sector such a fillip that the industry is currently estimated to be worth $48 billion in terms of overall market size,” Niti Aayog CEO Amitabh Kant said while releasing the report.

The restaurant business is the third-largest among India’s service sectors. NRAI secretary Rahul Singh recommended early implementation of the goods and services tax and added that liquor should be included in the proposed uniform single-tax structure.

Source: Economic Times

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