Kerala's Finance Minister said a fat tax of 14.5% would be imposed on branded restaurants

Kerala imposes fat tax What you need to know before you order a pizza or burger
news Fat tax Friday, July 08, 2016 - 13:43

In what is a first for India, the Pinarayi Vijayan-led Kerala government has imposed a “fat tax” on consumers eating junk food like pizza, burgers and tacos. The announcement was made by state Finance Minister Thomas Isaac on Friday, while presenting the LDF government’s first budget.

In his budget speech, the Finance Minister said a fat tax of 14.5% would be imposed on branded restaurants selling food like pizzas, burgers, tacos, doughnuts, sandwiches, pasta, burger patty and bread-filling. Fast-food chains like McDonalds, Dominos, Pizza Hut, Subway among others are likely to see the new tax imposed on them. 

While the budget speech failed to mention the rationale behind the government’s move, Isaac only said an estimate of Rs 10 crore would be raised by the new tax.. A fat tax has been imposed by countries like Denmark and Hungary to fight obesity.

Two studies done among school children in Kerala point to climbing obesity rates. A 2010 study conducted by VMS Bellary found that among high school students of Thiruvananthapuram’s city corporation, 12% were overweight while 6.3% were obese.

Another 2012 study by the Geneva Global Health Platform found higher prevalence of obesity among children attending private school in villages in Alappuzha district over those going to government school.

The imposition of fat tax has been debated across the world. While some argue that it would help reduce obesity rates, some question the need to impose a tax on people, who are otherwise healthy, and occasionally choose to indulge on junk food.  

Besides a fat tax, the state FM also announced a 5% tax on packaged products made out of wheat, maida, sooji and rava.  "Inspite of a tax reduction for wheat and wheat products, the consumer has not benefited as the MRP of these products have remained the same," stated Isaac. 

Coconut oil will also become costlier, with 5% tax imposed. 

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