Fat Tax Current Affairs - 2019
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The Soft Drinks Industry Levy also known as soft drinks sugar tax or sin tax or sugar tax came into force in United Kingdom as part of government’s plan to combat obesity and sugar related disease. With introduction of sugar levy, UK joins few countries, including Mexico, France and Norway that have introduced similar fat taxes.
The Soft Drinks Industry Levy was announced in 2016. It is based on levels of sugar in drinks, with most sugary drinks paying highest tax. Drinks containing 5 grams of sugar per 100ml taxed are taxed at 18 pence per litre, and those with more than 5 grams per 100ml taxed at 24 pence per litre.
The levy will be applied to manufacturers in Britain and whether they pass it on to consumers or not will be up to them. It will be not applicable to fruit juices as they don’t contain added sugar and neither to drinks that have high milk content.
The levy is expected to raise 240 million pounds every year for Treasury. Proceeds from it will be used to directly fund new sports facilities in schools as well as healthy breakfast clubs, ensuring children in UK lead healthier lives.
According to UK government figures, 60% of its population is overweight, with approximately one-in-four people obese. Sugary soft drinks account for around 20% of sugar consumed by children. High sugar consumption has been linked to weight gain, which is risk factor for several obesity related diseases including cancer in adults.
Rather than banning products or forcing companies to act, UK Government through this levy is hoping to nudge manufacturers in healthier direction. One option open to companies is changing recipes to lower added sugar, so that they pay less or no tax.
Kerala Government has proposed a “Fat Tax” on fast food items like burgers, pizzas, donuts and pasta etc. served in branded restaurants in a bid to discourage the junk food culture.
The first-of its-kind move in the country was announced in the maiden budget of the CPI(M)-led LDF Government in Kerala presented by Finance Minister Dr. T.M. Thomas Issac.
The revised state budget for 2016-17 expects the Fat tax will add an additional Rs.10 crore to the state coffers. The fat tax’s major concern is with issues related to public health more than revenue generation.
- The revenue impact of the fat tax will be modest, but it could have a big impact nationwide on the food industry if other states follow suit.
- Companies will pass on this tax partially or fully to the customer which may make the customer cut back on pizzas and burgers.
- Critics believe that imposing the tax is not going to change consumption patterns but will have an impact on the volume of such food products sold.
- It will discourage junk food and play some role in healthy lifestyle of people as Kerala has one of the highest numbers of patients of diabetes or hypertension in the country caused due lifestyle changes.
Fat tax: It proposed tax on foods or drinks judged to be unhealthy and whose consumption is believed to be linked to rising obesity levels. It is similar to the sin tax imposed on items such as alcohol or tobacco to discourage their consumption. Fat tax on junk food has been successfully imposed in European countries such as Denmark and Hungary.
Note: Kerala isn’t the first state to impose so-called Fat tax. In January 2016, Bihar government decided to impose a 13.5% value-added tax (VAT) on items such as salted peanuts, samosas, sweets and a few branded snacks.