Junk food to become costly if government clears ‘fat tax’ proposal
A fat tax will be charged on junk food, if Prime Minister Narendra Modi clears a recommendation from a team of top bureaucrats he had constituted to suggest ideas on health, sanitation and urban development in this years’ Budget.
The 11-member group of secretaries recommended “imposition of additional taxes on foods with added sugar, salt and saturated fats”.
The suggestion was aimed at stemming a spurt in lifestyle diseases such as diabetes and hypertension, which are linked to junk food — a grey area in India without clear-cut guidelines on food and beverages considered unhealthy.
The term “junk food” has not been defined under the Food Safety and Standard Act.
The additional revenue from the fat tax should be diverted to the health budget, said the group, which included Union health secretary CK Mishra, and Dr Soumya Swaminathan, director general of the Indian Council of Medical Research (ICMR), the nation’s top organisation for promotion of biomedical research.
“This will help increase public spending on health, which is just 1.16% of the GDP now,” said a senior government official.
If approved, such food products could attract higher tax under the proposed goods and services tax (GST) that the government has proposed to implement from this April.
“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,” said a member of the group.
“A final call will be taken by the Prime Minister.”
The recommendations are likely to become government policy because a similar group’s suggestions such as making Aadhar a money bill and advancing the Budget cycle were adopted last year.
But implementation could be a major challenge as a similar tax that Denmark experimented with in 2011 fell flat and the country had to roll it back a year later because of growing criticism. The Danes found that people went for cheaper alternatives, which defeated the purpose of having a junk food tax.
Many US states such as Philadelphia and California levy tax on sugary beverages, as does Mexico and Hungary.
Back home, the Kerala government last June proposed a 14.5% tax on food items such as pizza and burger served in branded restaurants.
Last October, the Delhi government’s advisory agency proposed a tax on food and beverages with high sugar, salt and saturated fat. But it hasn’t been cleared yet.
Over-nutrition is turning out to be a major health issue among adults in India. According to National Family Health Survey data for 2015-16, the number of obese people has doubled in the past decade.
A WHO study too found that 22% of children in India were obese and unhealthy.
The Modi-constituted group has recommended increasing public spending on health to 1.5% of the GDP by 2019.
It also suggested making ICMR the nodal agency for all health research, saying such a move will stop overlap of work done on health by government institutions.
“There is limited and scattered funding with 80% going towards payment of salaries and buildings,” said an official.