The Hindu Business Line : Call to drop Kerala tax hike on health drinks

The State Government's Budget proposal for raising the tax on health drinks from 12.5 per cent to 20 per cent has not gone down well with those in the industry who would like to dub it as "taxing on health".

The Confederation of Indian Food Trade and Industry (CIFTI) feels that the Budget has "misclassified" health drinks as luxury items along with refrigerators, washing machines and microwave ovens. The anomaly is all the more glaring considering that a clearly luxury item like gold jewellery is being taxed at a much lower rate than health drinks.

Mr P.S. Mukherjee, President, CIFTI, said that Kerala is a milk deficient State and health drinks have long been used as a nutritional supplement for fresh milk. Also, these drinks contain essential agricultural products that the State does not cultivate.

He said that available research data showed that sections of the society with monthly incomes below Rs 5,000 were heavily dependent on health drinks to bring them nutritional security. And many a household kitchen in the State places health drinks next to essential items such as tea, coffee and sugar.

Revenue loss

He said the Government's intention of raking in more revenue by this measure would come a cropper with unscrupulous traders smuggling in these drinks from the neighbouring States. This would actually result in loss of revenue to Kerala.

The farmers in the State also stand to lose in the bargain. Kerala is one of the principal producers of cocoa, which is an important raw material for some of the health drinks and a means of livelihood for many in the farming community.

The tax hike would lead to a decline in the production and sale of the health drinks, which in turn would result in lower procurement of cocoa from the State.

Mr Mukherjee said that he had taken up the matter with the Finance Minister, Dr Isaac Thomas, and the latter had assured him that he would certainly look into it.

More Stories on : Taxation | Beverages | Kerala

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