The Kerala budget was noted for the imposition of a “fat tax” on junk food sought after by the younger generation. The proposal was hailed as a measure to cut down the consumption of unhealthy food items such as burger and pizza. However, the broad application of the new tax rule would defeat its purpose by raising the prices of even healthy food sold at branded restaurants.
When the common man’s food is also hit by a fat tax, it is a cause of concern. Food prices may skyrocket at restaurants after the imposition of the new tax. Would the consumer be required to pay more for whatever he eats from restaurants at shopping malls and other high-end destinations?
The government has to define “branded restaurants”. Is the definition limited to multi-national brands or also applicable to local brands?
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Taxes have only a limited role in discouraging food habits. A study by the Pennsylvania University suggests that even the imposition of a 100-percent tax on junk food could cut down obesity by only 1 percent. Higher taxes should only be a part of the strategy to decrease the consumption of unhealthy food. Education and awareness creation against junk are the other measures to be taken against junk habits.
The government is as much responsible for ensuring just prices for food as it is required to roll out food safety measures. It cannot let the people to pay more for low-quality food at restaurants.
No matter the amount of revenue they generate, tax measures have to be analyzed by the ripples they create in society. Another proposal in the budget has also raised hackles. The increase in amount and extent of registration charges on property transfer essentially means that registration duties are applicable to property transfers even if they are between parents and children or other close relatives.
This proposal is not helpful to the common man and it was best avoided, especially when the real estate sector is facing a crisis in Kerala. The government should bear in mind that the state still has so many people without a piece of land to call their own.
This budget proposal makes sense if it were intended to bring the transaction of land within the ambit of land in possession. At the same time, we have to make sure that the proposal does not create a loophole to overcome the regulations of land in possession.
In the age of nuclear families, it is natural for common man to transfer land. The budget could have spared the people the extra burden had it applied a cap on it.
The government has a duty to differentiate between natural land transactions and manipulated ones. The government should look into the problems associated with the implementation of the new proposal and amend it accordingly.
(The writer is an economic affairs expert and the former principal of Maharaja’s College, Ernakulam)
