Kerala Government Imposes 14.5 Per Cent Fat Tax on Junk Food [ Current Affairs ]

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Kerala Government has introduced a “fat tax” of 14.5 % on foods like burgers, pizzas and doughnuts along with other junk foods in branded restaurants. The newly-elected LDF government in the state has imposed 14.5 percent tax on branded resturrants and restaurant chains selling fast food.

Image shows the fast food

Image shows the fast food

Showing image of fast food

  • The studied state budget for 2016 - 17 expects the Fat tax will add an additional Rs. 10 crore to the state reserves.
  • Fat tax’s major related with issues to public health more than revenue generation.

Implications:

  • The revenue impact of the fat tax will be uncertain, but it could have big impact nationwide on the food industry if other states follow uniform.
  • To make the customer cut back on pizzas and burgers, companies will pass on this tax partially or fully to the customer
  • Imposing the tax is not going to change consumption patterns but will have an impact on the volume of such food products sold criticizers believes.
  • It will play some role in healthy lifestyle of people and discourage junk food.
  • Kerala has one of the highest numbers of patients of diabetes or hypertension in the country, many of these are related to lifestyle changes. Many of them (patients) are young.

About Fat tax:

  • Fat tax imposed on foods or drinks judged to be unhealthy and whose consumption is believed to be linked to rising obesity levels.
  • This tax on junk food has been successfully imposed in European countries such as Denmark and Hungary.
  • Fat tax is similar to the sin tax.
  • Sin tax imposed on items such as alcohol or tobacco to discourage their consumption.

Note:

  • Kerala isn’t the first state to impose Fat tax.
  • In January 2016, Bihar government also decided to impose a 13.5 % value-added tax (VAT) on items such as samosas, salted peanuts, sweets and a few branded snacks.

- Published on: July 11, 2016