Kerala levies 'fat tax' on junk food

The CPI(M)-led LDF government in Kerala has proposed a slew of new tax proposals, that include 14.5 per cent ‘fat tax’ on junk food like burgers, pizzas and pastas served in branded restaurants. Also the state has imposed five per cent tax on certain packed foods and five per ent tax on coconut oil.

The budget, presented by state finance minister TM Thomas Isaac, said steps would be taken to increase the tax revenue by 25 per cent per annum by various measures including elimination of corruption and implementation of trader-friendly measures.

In his three-hour-long speech, the state finance minister said that as a part of resource mobilisation, state will impose a tax of five per cent on packed wheat products like atta, maida, suji and rava and packed basmati rice. Additional revenue of Rs 60 crore is envisaged through this, he said.

In a bid to check the inflow of edible oils from other states in the guise of coconut oil, the budget proposed a five per cent tax on coconut oil. An additional Rs 150 crore is expected from this.

The proposed 'fat tax' of 14.5 per cent for burgers, pizzas and pastas served in branded restaurants would target an additional revenue of Rs 10 crore, he said. The VAT on textile has been increased from one to two per cent to garner an additional revenue of Rs 50 crore.

The stamp duty on land registration has been increased to eight per cent from the present six per cent. Isaac said the new stamp duty hike is justifiable as there is an increase in the 'capital gains' due to rise in the land value.

The move is most likely to create turmoil for multi-national fast food chains like McDonalds, Pizza etc. The state, however, expects to earn over Rs 10 crore from the new tax. A similar fat tax is already in place in countries such as Denmark and Hungary.