If PM Modi okays, junk food and sugary drinks could fall under fat tax net

The government may introduce a fat tax on junk food and sugary beverages in the upcoming budget, say various media reports. The Union Budget 2017 is to be presented on 1 February in Parliament.

The fat tax is aimed at curbing the high incidence of life-style diseases in the country, which, according to health activists, is a direct fallout of the consumption of such food items.

According to a report in The Times of India, the govenrment is considering introducing this tax on sugary beverages and packaged food that have high salt content and saturated fats on the basis of a proposal made by a group of secretaries. The proceeds from this should be used for the government's healthcare spends, said the group.

 If PM Modi okays, junk food and sugary drinks could fall under fat tax net

AFP file photo

“Consumption of food high in added sugar, salt and saturated fat is seen as one of the major reasons for the increase in lifestyle diseases. To discourage people from eating junk food, we have recommended imposition of an additional tax on such food items,” a member of the group has been quoted as saying in a report in The Hindustan Times. According to the member, a final decision will be taken by Prime Minister Narendra Modi.

The fourth National Family Health Survey released by the Ministry of Health and Family Welfare in January 2016 had found that the number of obese people in India doubled over the last 10 years with Andhra Pradesh, Andaman and Nicobar, Puducherry and Sikkim reporting more than 30 percent of their population as obese.

According to a study by the British medical journal Lancet reported by The Wall Street Journal, India had 20 million women and 9.8 million men categorised as obese in 2014.

Of this, about 4 million women were severely obese. In comparison, in 1975, the country had just 800,000 obese women and 400,000 obese men. Obesity and related diseases like diabetes are definitely a growing problem for the country.

However, the tax proposal by the group of secretaries also has a Hindutva angle to it.

Firstpost had in September reported that the Rashtriya Swayamsevak Sangh and Baba Ramdev, who runs Patanjali Ayurved, are lobbying with the finance and health ministries to impose a heavy tax on products of PepsiCo and Coca-Cola.

The representatives of Ramdev and RSS had cited warnings of health campaigners that adults and children in India continue to consume huge quantities of hidden sugar in processed food and drink, fueling obesity and poor health.

Under the Goods and Services Tax, which the government is likely to roll out before September 2017, these beverages are to attract 26 percent tax and a cess above that. The quantum of cess will be decided by the GST Council.

According to sources in the government and Coca-Cola, the earlier proposal was to tax only food and beverages with high sugar content. The fresh proposal is to widen this canvas to include fat and salt.

What this essentially means is that, if the proposal gets the go ahead from the prime minister, chances are that all food items considered junk, including Maggi, Cadbury and other chocolates, potato chips like Lays and Kurkure and pizzas and burgers, will come under this high tax bracket with a cess on top of it.

However, it remains to be seen whether a fat tax like this can indeed curb the rising obesity. Denmark had introduced a fat tax in 2011 only to roll it back the next year as people there started downtrading or buying cheaper alternatives.

As of now, Kerala is the only state in India to impose a fat tax on junk food. The state government had in its budget for 2016-17 introduced a 14.5 percent tax on burgers, pizzas and pastas served in branded restaurants.

With inputs from Shantanu Guha Ray in Delhi

For full coverage of Union Budget 2017 click here.

Updated Date: Jan 17, 2017 14:49:17 IST