HEALTH
TAX - ECONOMY
News:
Levy
20-30% health tax on food high in sugar, salt, fat: study
What's
in the news?
●
The recommendation is an outcome of a
study commissioned by Niti Aayog, which is studying the impact of imposing
health taxes and warning labels on food products to encourage healthy eating
practices.
Proposed
Health Tax:
●
The proposed tax primarily focuses on bulk
purchasers such as confectionery and sweet manufacturers, aiming to decrease their demand for sugar.
●
This strategy intends to influence
consumption patterns at the production level.
Impact:
●
Applying the concept of Price Elasticity, researchers
anticipate a 2% reduction in demand
among regular consumers for every 10% increase in sugar prices.
●
However, for bulk buyers, a higher price
elasticity suggests a potential 13-18% decrease in demand with a 30% tax
increase over the existing 18% GST.
●
Similar tax increments of 10-30% on
sugar-sweetened beverages could result in a demand decline between 7% and 30%.
●
For HFSS products, the anticipated
decrease in demand ranges from 5% to 24%, correlating with tax variations.
Global
trends:
●
Over
70 countries have implemented similar taxation strategies on sugar, SSBs and
HFSS products.
●
These initiatives have showcased promising
outcomes in terms of decreased consumption and improved public health in
various regions, including Mexico, Chile, Saudi Arabia, Argentina and South
Africa.