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Fast Food Tax: Kerala imposes 14.5pc ‘fat tax’ on junk food

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The CPI(M)-led LDF government in Kerala has proposed a slew of new tax proposals, including five per cent tax on certain packed foods and a ‘’ of 14.5 per cent for burgers, pizzas and pastas served in branded restaurants, according to a PTI report.
Fast Food Tax: Kerala imposes 14.5pc 'fat tax' on junk food
The Budget, as part of resource mobilisation, also levied a tax of five per cent on packed wheat products like atta, maida, suji and rava and packed basmati rice.

The move spells bad news 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.

Stating that the state was passing through a severe financial crisis due to various factors, the Budget proposed an ‘anti-slowdown package’ of Rs 12,000 crore for taking up various development and infrastructure projects like roads, bridges and IT parks.

The Budget, presented by Kerala Finance Minister TM Thomas Isaac, also 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.

Steps would be taken to attract Rs 1 lakh crore investment in various sectors in the next five years, he said.

In his three-hour-long speech, the State Finance Minister said the public distribution system would be expanded by including families of National Rural Employment Guarantee Scheme workers under free ration scheme, now limited to BPL families.

An additional amount of Rs 300 crore has been earmarked for this, he said, adding that Rs 75 crore has been kept aside for checking price rise of essential commodities.

The Budget, as part of resource mobilisation, levied a tax of five per cent on packed wheat products like atta, maida, suji and rava and packed basmati rice. An 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 additional revenue, received through this, would be used completely for the procurement of coconuts in the state, the minister said. The floor price of coconuts would be increased from Rs 25 to Rs 27, he added.

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.