The Hindu Business Line : The fat is in the fire

FOR THOSE who have a fast-food joint in Detroit, their fat could be in fire, what with the Mayor Kwame Kilpatrick, facing a $300-million budget deficit, proposing a 2 per cent fast-food tax.

If the people of this city, voted the US' fattest in 2004 by Men's Health magazine, shake in approval one of their several chins, Detroit would be the country's first to target fast-food outlets, taxing everything sold at these places, including salads.

But before that the proposal could well get fried by the Republican-controlled Legislature, whose approval is necessary to enact the levy.

Detroit's income streams include a share of the state revenue, an income tax, property taxes, a tax on its three casinos, and a utility tax.

Anyway, will what is derisively called the `Fat Tax' do anything to the Treasury bulge?

Not much, as even the city officials say the levy can fetch only $17 million a year.

Of course, for a city readying for mass layoffs and major service cuts, every dollar may count.

Other American cities and states have tried special taxes on prepared food, and some even `snack taxes'.

A New York State Assemblyman has proposed a 1 per cent tax on junk food, video games and TV commercials to fund anti-obesity programmes.

Will the `Fat Tax' do any thing to the bulging people? Not much, again, as the levy may mean 6-7 cents more per serving, and this is unlikely to deter the people from reaching for the Big Mac or asking for extra cheese on their pizza.

Anyway, in a city where people do not use the car only when inside their homes, they may simply drive to fast-food places just outside Detroit to hog on some low-tax, high-cal food. The opponents to the tax plan are crying fo`w'l that the 2 per cent tax, coming on top of a 6 per cent state sales tax on restaurant meals, would affect the young and old, generally said to be the major consumers of fast-food.

They also fear for the city whose stiff taxes, they say, have already pushed out people and businesses.

In a 2003 study by the District of Columbia comparing Washington and the biggest cities in each state, Detroit levied the 10th-highest tax burden for a family of four with an income of $75,000. State and local taxes totalled 11 per cent, according to the study.

The Mayor has also drawn flak for trying to tax people even as he has been splurging at restaurants all over the country at the city's expense.

For, according to an AP report, he spent "$210,000 for travel, meals, a bottle of pricey champagne and other items on his city-issued credit card over nearly three years, public records show".

The report, quoting The Detroit Free Press, said the spending included 78 charges for meals over the 33 months, including a $283 bill at a New York restaurant in January 2002 and a $456 bill at another in Washington in September 2003.

The 34-year-old former State House Democratic leader also spent more than $600 at two upscale restaurants in January 2002 while attending a US Conference of Mayors in Washington.

In March 2002, he charged a $194 dinner, including an $85 bottle of Moet & Chandon champagne, at an Atlanta restaurant, the report said.

But all this is explained away by his spokesman as expenses that were part of his effort to attract business to the city.

Surely the Mayor, and his city, must quickly go on a fiscal diet.

J. Srinivasan

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