TAXING SIN

While there has been talk of imposing a heavy'sin tax'on unhealthy or junk food items to deter people from consuming them, is it enough? What does it take to help promote a positive food environment?

- VAISHALI DAR

CIGARETTES OR ALCOCHOLIC drinks cost a lot more than their production cost. In fact, the tax levied on such items is higher than most products that you use on a daily basis and comprises a major portion of their prices. The idea is to discourage people from consuming unhealthy or junk food products by making them unaffordable. Even in the Budget presented on Wednesday, the finance minister enhanced tax on cigarettes by 16%. This higher tax is called 'sin tax'.

While taxing unhealthy food choices is not new, experts wonder if the move is sufficient in itself. People are becoming increasingly susceptible to lifestyle diseases like cancer, diabetes, uncontrolled hypertension and cardiovascular diseases. Also, it's becoming important for the health-conscious and globally-aware consumer to keep tabs on how much calorie, salt or sugar intake does a 100 gm pack of snack or biscuit or a sugar-sweetened aerated and flavoured water contain.

Status check

Junk or unhealthy food has been a category suffering a higher burden of tax for many years now. Even under the VAT regime, various high glycaemic index (GI) foods have been charged a higher rate of tax. This practice has continued under the GST regime, too, where certain junk foods, including sugary carbonated beverages, bear a 40% rate (28% GST+12% compensation cess), says Sweta Rajan, partner, Economic Laws Practice, a full-service law firm in India with offices in Mumbai, New Delhi, Pune, Ahmedabad and Bengaluru.

India is not alone in this approach. Globally, many countries levy higher taxes on junk foods given the social impact that such foods have. Higher VAT in Canada and many EU countries, and sales tax in the US are levied on sweetened beverages and high energy foods.

Implementation has proved to be a challenge owing to classification issues.