Kerala govt to implement 14.5 per cent fat tax' on junk food

Thiruvananthapuram: The newly appointed CPI(M)-led LDF government in Kerala on Friday imposed a new tax rule for popular fast-food outlets, in its maiden 2016-17 budget along with additional focus on strengthening social welfare schemes, public health and education.

The budget, the first by the Pinarayi Vijayan-led government which came to power in the May assembly polls, proposed a slew of new tax proposals including five per cent tax on certain packed foods and a 'fat tax' of 14.5 per cent for burgers, pizzas and pastas served in branded restaurants.

Stating that the state was passing through a severe financial crisis due to various factors, the budget proposed an 'anti-slowdown package' of Rs 12,000 crore for taking up various development and infrastructure projects like roads, bridges and IT parks.

The budget, presented by state finance minister T M Thomas Isaac, also said steps  would be taken to increase the tax revenue by 25 per cent per annum by various measures including elimination of corruption and implementation of trader-friendly measures.

Steps would be taken to attract Rs one lakh crore investment in various sectors in the  next five years, he said. The government is committed to continue various welfare measures for the downtrodden, Isaac said, adding that the budget increased the  amount of all welfare pensions to Rs 1,000 and an amount of Rs 1,000 crore has been earmarked for this purpose.

"This enhanced pension from June will be distributed to the beneficiaries along with one month advance," he said.

 In his three-hour-long speech, the state finance minister said the public distribution system would be expanded by including families of National Rural Employment Guarantee Scheme workers under free ration scheme, now limited to BPL families.

An additional amount of Rs 300 crore has been earmarked for this, he said, adding that Rs 75 crore has been kept aside for checking price rise of essential commodities.

Detailing steps to be taken to strengthen public education system, he said by the next five years, a government school in all the 140 assembly constituencies would be upgraded to international standards and Rs 1,000 crore has been earmarked for it.

"A total of Rs 250 crore is expected for the purpose this year," he said. "The project will be implemented in cooperation with certain foundations who come forward to support the scheme."

The budget, as part of resource mobilisation, levied a tax of five per cent on packed wheat products like atta, maida, suji and rava and packed basmati rice. An additional revenue of Rs 60 crore is envisaged through this, he said.

In a bid to check the inflow of edible oils from other states in the guise of coconut oil, the budget proposed a five per cent tax on coconut oil. An additional Rs 150 crore is expected from this.

The additional revenue, received through this, would be used completely for the procurement of coconuts in the state, the minister said. The floor price of coconuts would be increased from Rs 25 to Rs 27, he added.

The proposed 'fat tax' of 14.5 per cent for burgers, pizzas and pastas served in branded restaurants would target additional revenue of Rs 10 crore, he said.

The VAT on textile has been increased from one to two per cent to garner additional revenue of Rs 50 crore.

The stamp duty on land registration has been increased to eight per cent from the present six per cent. Isaac said the new stamp duty hike is justifiable as there is an increase in the 'capital gains' due to rise in the land  value.