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July 12, 2016Kerala imposes fat tax on burgers, pizzas in budget; LiveMint, 8th July, 2016
The Kerala budget presented by finance minister Thomas Isaac focuses on strengthening social welfare schemes, public health and education
The budget says the Pinarayi Vijayan government plans to increase tax income by 25% through these initiatives. Photo: Mint
Fri, Jul 08 2016 04 02 PM IST | LiveMint | Nidheesh M.K.
Bengaluru: Kerala’s newly elected Left Democratic Front government’s maiden budget says a lot about what its priorities are.
Finance minister Thomas Isaac, who presented the revised budget for 2016-17 on Friday, said the government will raise tax revenues through nine schemes, which includes introduction of a 14% “fat tax” on burgers, pizzas, tacos, doughnuts, sandwiches, burger patties, pasta and bread-fillings.
The other moves include raising taxes on more expensive rice varieties and packaged wheat-based food products.
The budget says the Pinarayi Vijayan government plans to increase tax income by 25% through these initiatives, but it does not go into the details of why some of these measures have been introduced.
“Being a new government which has been voted to power on a popular sentiment against inflation and corruption, we can’t really increase taxes for anything. Except marginally increasing taxes on items that are unlikely to hurt the party’s constituencies,” said a senior leader of Communist Party of India (Marxist), the party which leads the LDF government.
Kerala isn’t the first state to pick on so-called junk food to beef up tax revenue. In January, the Nitish Kumar-led Bihar government decided to impose a 13.5% value added tax on items such as samosas, salted peanuts, sweets and a few branded snacks to make up the loss from the ban on liquor sales from 1 April.
However, public policy experts are unsure about whether the government’s efforts will bear fruit.
“There are no great measures in the budget for generating more income or to reduce expenditure considerably, except a bold statement that they won’t create any new institutions in the next two years,” said D. Dhanuraj of the Center for Public Policy Research, a Kerala-based think tank
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