The newly elected government in Kerala recently proposed what is popularly known as a "fat tax". The government placed a 14.5% tax on branded fast food outlets such as McDonald's and KFC. The aim, according to the government, is to fight obesity, as well as fill the state coffers. But can such a tax really help with the problem of rising obesity and assorted lifestyle diseases? I'm not too sure.
Kerala isn't the first to come up with this kind of tax. Hungary also introduced a junk food tax, and France brought in one on sweetened drinks. A 2006 study, published in the Journal of Epidemiology and Community Health, concluded that carefully targeted food taxes could produce moderate changes in food consumption, and could cause a reduction in cardiovascular disease.
The unorganized food sector is a much bigger contributor to the obesity epidemic than the McDonalds and KFCs...
While there is material that appears to suggest that a fat tax could have some positive impact, there is also a fair amount of material to suggest that this is not the way to solve lifestyle disease-related issues.
A 2013 paper, published in the Journal of American Physicians and Surgeons, concluded that attempting to replace individual responsibility with state intervention has failed to deliver, and that more such initiatives, including taxes, would fail.
Denmark introduced, and then cancelled a similar tax. A study on the Danish tax concluded that the tax was introduced mainly to increase public revenue, and had no strong proponents but several powerful adversaries. However, the study did conclude that the tax did change consumer behaviour.
According to the Economic Times, the tax introduced by the Kerala Government proposes to tax only branded outlets. However, it won't affect the huge number of street food vendors, or small to medium restaurants. These vendors and outlets also sell the same kind of food, such as starchy and oily Indian snacks as well as pizza and burgers; sustained consumption of such foods can result in lifestyle diseases. Industry representatives have indicated that the burden of the proposed tax will not be passed on to the consumer. If this actually happens, then the "curbing obesity" objective would be wholly defeated.
While there is evidence to indicate that a targeted food tax could have a positive influence on people's diets, I don't think that such a tax would have any substantial effect in any part of India. The unorganized food sector is a much bigger contributor to the obesity epidemic than the McDonalds and KFCs, and is unhygienic to boot. The unorganized food sector is just too large to effectively implement a tax like the one proposed by the Kerala government. I believe that the best way to combat the growing lifestyle disease problem in India is through a sustained education and awareness campaign.