“Government could consider taxing food items high on sugar, fat and salt content and which don’t have front-of-the-pack labelling. But the food industry finds this step illogical as implementing tax is not a solution, rather creating consumer awareness is the need of the hour.”
Economists and politicians have always taxed harmful products such as cigarettes, tobacco and alcohol. Since these products are harmful they are taxed. The purpose of such a tax is to reduce consumption and generate revenue for the government.
With the concern of public health, the government is working on a roadmap to tackle increasing obesity in the population, and the measures may include higher tax on foods high in fat, sugar and salt. Higher tax is one of the many options being considered including front-of-pack labelling and marketing as well as advertising of HFSS (high fat, salt sugar) foods.
At present, non-branded namkeens, bhujias, fruit and vegetable chips and snack foods are charged 5% GST. For branded and packaged items, the tax is 12%.
On the contrary, sin goods like tobacco products face 28% GST to discourage their use. Most of such products also carry statutory health warnings on the pack. So it is expected that a similar model could be replicated for snacks high in HFSS content.
As per the National Family Health Survey 2019-20, the proportion of obese women in India has gone up to 24% from 20.6% in 2015-16. Among men, 22.9% were overweight as per the survey, compared with 18.9% four years earlier. In states like Telangana, Kerala and Himachal Pradesh, nearly one-third of men and women (in the age group of 15-49 years) are overweight or obese.
But a fat, salt and sugar tax will ultimately impact those families who are already struggling to make ends meet, by making food and drink more expensive. After many years of cost pressures, businesses in our sector are already operating on very tight margins, and any further costs would simply have to be passed on to the consumer in the form of higher food prices.
These taxes will not drive reformulation. Food and drink manufacturers have been voluntarily lowering fat, salt and sugars in recipes for decades as well as reducing portion size, but it takes time to change much-loved products.
It is hard to view the proposals that the taxes raised will pay for additional health plans with anything but skepticism. The same promise was made ahead of the introduction of the soft drinks industry levy but was quietly dropped shortly afterwards.
Food industry’s view
The government think tank Niti Aayog is reviewing the evidence available to come up with solutions to tackle obesity in the population and one of the solutions to combat obesity is fat tax.
But the industry has a mixed view on it. Many people from industry believe that this tax is brought in to deter the growth of the food industry. As the higher taxes on HFSS products is more of money related strategies of the government then health hazard. Also increasing the tax is no remedy as a solution; rather creating consumer awareness is the need of the hour.
Seema Atreya, Food and Beverage Consultant stated that those of us coming from traditional homes have literally grown on these foods. We as growing children have gorged on these snacks to kill in-between meals’ hunger often. However, these traditional products do not have a reference of posing any threats of obesity, hypertension or diabetes with our previous generations.
In fact, Deepta Gupta, Director – Indiyum Foods Pvt Ltd. CEO & Founder – Egremontz Business Solutions Pvt. Ltd. said that since ages our forefathers have been consuming the same traditional food and we are using same recipes which have been handed over from generation to generation. Indian health records clearly show that our old generation led a healthy life and lived for up to 100 years by virtue of eating the same traditional Indian Food. It is our firm belief that we are providing healthy, nutritious, and full of taste food to our consumers. We are committed to preserve the heritage as well as the nutrition for future generations also.
“Subsequently just around the start of this century, a WHO report proposed a hypothesis of cost and pricing of food in preventing obesity. The inexpensiveness of unhealthy foods relative to fresh produced was thought to be an important contributor to the overconsumption of junk food”, informed Seema Atreya.
Similar interpretations and regulations to this effect were imposed in Canada and Denmark in the past, which were later repealed, as increasing the pricing did not deter the people from buying the food they wanted to consume.
“In fact, there are various research contents available to refute the theory of HFSS taxation having effects on reducing the life-style disorders in any country, briefed Atreya.
“India is a diverse nation that has food linked with taste, tradition and love. And taxing these foods is not the answer. If we think of traditional tea time or anytime reach snacks across the country, we can instantly recall things like “Namkeens, Bhujiyas, Fafda, Chakli, Mathris, Samosa, Kachori etc.”, served with various pickles and chutneys, recalls Seema Atreya”
So, it is extremely unfair and illogical to extrapolate HFSS regulation to Indian snack foods and sweets. As obesity, hypertension and diabetes are primarily “Life-style dis-orders” and are attributed to consumption of junk food. From a nutritional perspective, majority of Indian snacks and sweets do not fall into “Junk” category, on the contrary, they carry seasonal nutrition, vitamins and protein in different forms.
Many a times the snacks by formulation include one or few Superfood too!
“Also all packaged and fried foods cannot be categorized as “Junk”, however they may be a “High Calorie” snack and like any other food needs to be regulated by the consumer and not by Taxation”, stressed Atreya.
On the contrary, non-indigenous snacks may fall into the “non-junk” category and may not require carrying any special labelling under the proposed act, due to lower fat or alternate cooking methods, but may actually be junk, due to poor nutritional value. These foods may also carry unlabeled traces of “processing aids” which are being deliberated for label inclusion in certain countries.
While calories are an important tool to regulate energy intake for the body, but the importance of consuming nutritionally balanced diet is far more important. The message and method to adapting to a balance diet should be reverberated through the education system and user guidelines through the awareness programs.
Shashank Joshi, GM Operations, Chitale Bandhu Mithaiwale finds this entire taxation scenario hilarious. “We are actually treating food as “Demon” or “Sin” and trying to punish those who make them instead of improving habits of our citizens. For thousands of year, we are eating those laddoos or chakli and our ancestors were healthier than us. Even Harappa Civilization has been found the samples of laddoo.”
“We have replaced good life style and exercise with bad life style with no exercise. Instead of working on improving habits of our citizens to do exercise and then eat good food, we are trying to penalize food products”, he said.
It is very similar to example – society or government allows cultivating and making tobacco products while we know them as harmful/cancerous, and we put tax on cigarettes or tobacco. This is against the natural law of justice.
“If we force industry to reduce HFSS (Fat/Salt/Sucrose) in product each year by 15 %( as suggested by HFSS Draft rules) then one time will come where laddoos wouldn’t be made, as sugar – the binder was forced to be reduced beyond limit”, updated Joshi.
Dr. Baiju Bhai Mehta, MD, Das Pendawala said that the setback in this will be that the low-income people would spend a bigger proportion of their yearly income on the HFSS food tax than higher-income ones. Unfortunately India has a higher proportion of low-income individuals, food is a basic requirement; hence this tax would be unethical.India still has a large population that is malnourished, what would be considered unhealthy is really necessary for such a population “While Indian Mithai and Namkeen include fat and sugar, they also contain a variety of high-quality components like as besan, atta, milk, dried fruits, and other nutrients”, he explained.
Baiju Bhai also added that a tax on HFSS food, which is regarded a consumption disincentive, would generate significant cash for the government, which may lead to other sources of revenue, such as greater sin taxes on cigarettes and alcohol, but it is unlikely to influence consumer habits.
“The higher tax on HFSS products does not seem to come out of any health hazard but basically money minting tactics of the government” vented Kumar Manish, Madhulika Foods Pvt Ltd.
In case the government is considering a hike then they should bring a panel of experts to prove the same. Food experts and many studies suggest that one should not change food too occasionally and every person should try to have similar food which their elder generations were having. Obviously these include spices, sugar and salt.
Then we have Shaishav Mittal, Director, Lovely Bake Studio. His take on this is, “Nowadays, the consumer is well-informed about what he wants and consumes. His consumption pattern is determined by his dietary choices. He selects the finest that matches his taste buds among a variety of sweets and snacks, and he will always favour the flavours and tastes that he is inclined to pick, regardless of the price listed on the package. The high cost of these snacks will be borne by the manufacturers or retailers, and is often shared by the consumer as well. As a result, raising taxes by the food regulators will not be advantageous in any manner. If a customer wants to choose a specific food item off the shelf, he will do so regardless of price” he stated.
“Ingredients like besan, which has a lot of health benefits, are used to make salty snacks. Dry fruits are high in energy and serve an important role in people’s lives in addition to offering health advantages… Such government-sponsored commercials will aid in the promotion of Indian products rather than chocolates and other sweet treats.
–Shaishav Mittal”
Nilanjan Ghosh, of Mithai (Partner) asserts that higher taxes are never the solution. It has been tried out with liquor, cigarettes, etc. Do you have any concrete results as such? There has always been a misconception that sweets cause diabetes. Doctors today are saying you take a Rosogulla but walk an extra mile.
“Moreover, what about pizza and pasta pastries, do you have any idea that even impure sugar can be mixed in these products and still be consumed by humans? At least in sweets, you are bound to use the best quality sugar for production. Sweets have nutritional values too, which are overlooked by government bodies time and again”, he added.
Food expert suggestions
The food industry’s take on increasing the tax on food with high fat, salt and sugar is different from the government as seen above they have unanimously held that the implementation of tax is no solution; many countries have done it and then vetoed it. The basic resolution is awareness and educating people on what is right and wrong.
“As an Industry expert and so many years of experience, increasing the tax is no remedy as a solution. Creating consumer awareness should be the path taken; our food consumed in moderation is always beneficial and not harmful for the body”, evaluated Deepta Gupta.
Just to give an example there is very high tax on tobacco industry products despite that the consumption is on a high and growing. “In my opinion awareness can be the best way forward but creating hurdles for the business is not good”, he advised.
“We are exporting traditional Indian Products to various global destinations where they are considered healthy as well as nutritious as the sales are growing at the rate of 25% YOY (Year on Year) and no other country is imposing higher tax on Indian Products then why in our own country India?
–Deepta Gupta”
While Dr. Baiju Bhai said, “As a positive move, we recommend efforts such as healthy food subsidies, health education programmes, and physical activity promotion.”
Seema Atreya thinks that the proposed warning label and taxation of HFSS products clearly needs to be reviewed more intellectually rather than imposing such trade barriers on traditional foods. Such regulations not only will make the traditional foods look very bad in comparison with highly processed, but low-calorie foods.
“This issue needs to be taken up on a serious note with the authorities to prevent a blanket labelling of HFSS foods”, she adjoined.
“It is important to first consider the product as per category i.e. sweets, beverages, and its threshold limits and then based on product characteristics, it should be kept voluntary to industry and not forced”, said Shashank Joshi.
Joshi also said that the next thing is to educate the customer to have healthier life, educate them to follow proper exercise and avoid following sedentary life style.
Promote healthier product, more natural products, and provide incentive to industry which makes such product rather than penalizing for producing the products.
Shaishav Mittal asserted that GoI should build up to such campaigns and unleash the goodness of the basis products of mithai or namkeen, just like California Almonds or Walnuts, which market their goods by citing the product advantages. Salty snacks are derived from ingredients like besan, which offers a number of health advantages. Dry fruits are high in energy and play a significant part in people’s lives, as well as providing health benefits… Such government-backed advertisements will assist to promote Indian items rather than chocolates and other sweet confections.
Commodity prices are skyrocketing as the globe watches a battle erupt in the northern hemisphere. Inflationary pressure is felt by everyone. However, product usage will not decrease. People must eat in order to survive, and they will do so regardless of the cost. Raising the tax on HFSS does not appear to be a viable option for reducing the high fat, salt, and sugar content.
“Any issue the government is contemplating should first be brought to a panel of experts from our universities and other think tanks. Start educating the people. India has achieved two children per couple by only educating the masses and not taxing them or punishing them, said Kumar Manish.
In a democratic society, the way of life should be the benchmark of standards set by democratic institutions, so if there is something wrong with the food, then educating the masses and gradually changing their habits will be more effective. One more such example is iodized salt.
“My personal final take is to educate the people and make changes gradually and then discuss this among the think tanks in a positive manner and environment”, Manish adjoined.
Has the price helped reduce any addictions that society is suffering from? asked Nilanjan Ghosh. So instead of enforcing a higher rate of taxes, we should improvise on the making of low-calorie sweets to begin with. This can certainly control sugar consumption to an extent. Sugar substitutes are also coming up but require more research. If we focus on it, we may get brilliant results.
“One more thing that needs to be kept in mind is that sugar is a natural preservative. So we need to replace it with bio preservatives too. We might not get immediate results. But a congregation of the above steps in the long run can certainly deliver results”, he said.
End
So why is government trying to impose this tax on food with high fat, salt and sugar?
Well, Niti Aayog noted that obesity is especially rising among children, adolescents and women in India. A national consultation on the prevention of maternal, adolescent and childhood obesity was organised under the chairmanship of member (Health), Niti Aayog, on June 24, 2021, to discuss policy options to tackle the issue.
According to the National Family Health Survey (NFHS-5) 2019-20, the percentage of obese women increased to 24 per cent from 20.6 per cent in 2015-16, while the percentage for men rose to 22.9 per cent from 18.4 per cent four years earlier.
Thus, Niti Aayog is reviewing the evidence available to understand the actions India can take, such as front-of-pack labelling, marketing and advertising of high fat content foods and taxation of foods high in fats, sugar and salt.
It is reviewing the evidence available to understand the actions India can take, such as front-of-pack labelling, marketing and advertising of high-fat content foods, and taxation of foods high in fats, sugar and salt.
But has it consulted the food industry or even considered their point of view?
Not Yet. But hopefully, before implementing this tax, they will consider discussing it with industry to get a much clearer picture of the whole issue.