Indian state of Kerala to introduce 'fat tax'

Signal of change / Indian state of Kerala to introduce 'fat tax'

By Toby Strudwick / 18 Oct 2016

The Indian state of Kerala is to be the first in the country to introduce a ‘fat tax’. The proposed 14.5% levy on all pizzas, burgers, donuts and tacos sold through branded outlets was announced in the first budget of the new communist government. It is not clear yet when it is due to be implemented.

The region is the second-most obese in India, which has the third-highest rate of obesity in the world. The import of unhealthy Western diets is commonly thought to be the cause, however other voices have pointed out that sedentary lifestyles are on the rise due to a changing workforce, which means more IT / service jobs, as opposed to active ones in agriculture or construction, and more disposable income to spend on luxury food.

Thomas Isaac – the new Finance Minister – says that the tax will raise 100 million rupees (£1.1M) annually, whilst dissuading people from eating unhealthily. Coconut oil and packaged products made out of wheat will also be subject to a 5% tax.

So what?

A recent global meta-analysis calculated that 36.9% of men, and 38% of women are now obese, up from 28.5% and 29.8% respectively in 1980. Much of the increase has taken place in developing countries, who also face the largest burden on healthcare from non-communicable diseases (NCD).

The WHO recommends fiscal measures such as taxation to combat NCDs, and although not many countries currently adopt these measures, the list is growing. For instance, the UK recently announced a tax on sugary drinks, the receipts from which would be used to promote sport in schools.

However, the proposal was not without its critics, who pointed out that some of the most sugary drinks, for example many high-street coffees would be exempt. Denmark also repealed its fat tax after it was marred with controversy, perhaps most infamously due to the fact that people were driving across the border to stock up on unhealthy food.

Similar concerns have been raised in Kerala. The region has relatively few multi-national fast-food outlets (there are only seven McDonald’s), leading to the criticism that the tax is unfairly targeting local business owners, not ‘the rich man’ as Isaac claims. Moreover, many of the unhealthiest foods are exempt, which has led to some detractors raising doubts about how much effect the tax will have on obesity. Doubts have also been raised about Isaac’s true motive, after he stated a need to raise tax receipts in the region by 20-25%.

Nevertheless, the tax is going ahead and it will be interesting to see whether it is effective. Isaac responded to claims about the narrow target by saying it was just the beginning of a ‘war on fat’. He certainly seems to be ahead of the curve; one expert dubbed sugary drinks ‘the new smoking’, which seems to support, if not pre-empt the kind of fiscal measures that are used to dissuade smokers.

Whether or not criticisms of the measure are justified, non-communicable disease is on the rise, and with fiscal measures such a popular policy-making tool, it seems only a matter of time before more countries and regions follow suit.

Sources

http://www.thehindu.com/news/national/pizzas-in-kerala-get-a-145-fat-tax-topping/article8824928.ece

https://www.theguardian.com/global-development/2016/jul/20/tax-on-junk-food-in-kerala-leaves-indians-with-a-bitter-taste

http://www.bbc.co.uk/news/world-asia-india-36771843

What might the implications of this be? What related signals of change have you seen?

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