GST levied on food products should be linked to its nutritional levels: WHO

According to Lenin Raghuvanshi, food safety activist and CEO of People’s Vigilance Committee on Human Rights (PVHCR), Uttar Pradesh says that the government should focus more on food labels with more clarity on the nutrients and contents contained in packaged foods.

“Food labels with pronounced warning signs would be more effective than these additional taxes and all. The government should immediately make it mandatory for unhealthy food products to have warnings prominently like they have done in the case of tobacco products. If there is a proposal for nutrition linked tax, the they should use the revenue generated for creating better health awareness among people,” Raghuvanshi adds
Takeaways
  • Nutrition linked taxation should be implemented proposes WHO
  • The suggestion is part of its recommendations for improving the health quality of ultra processed food
  • Financial incentives for manufacturers of healthy food products have also been proposed.
  • However experts suggest that financial regulations without proper health awareness among people might have limited success.
Please find the link for your review of the complete report:

Nutrition linked taxation according to the WHO would act as a catalyst for the manufacturers to make more healthy food and also higher taxation might lead to a reduction in the consumption of these unhealthy foods
  • Written by Binoy Valsan
  • With quotes from Dr Sayan Paul (senior consultant, radiation oncology), Dr Banshi Saboo (diabetologist), Lenin Raghuvanshi (food safety activist)
The report further states that the lack of nutrition linked taxation means all companies lobby to put their products in the lowest GST tax slabs irrespective of its health quotient.
The need for taxation policies to ensure that the highest tax slabs to be allotted for food that are listed under the category of High Fat Sugar and Salt (HFSS) food.

The World Health Organization has called for introducing a nutrition linked taxation system for ultra processed food in India. It has also been suggested that the GST rates should be linked to the nutritional value of the food product. These have been included in the WHO-ICRIER (Indian Council for Research on International Economic Relations) report analyzing the trends and issues of the ultra-processed food manufacturing sector in India released this week.

It has also been proposed that the financial incentives and subsidies given to food manufacturers be also linked to the nutritional quality of their products. The move according to the WHO would act as a catalyst for the manufacturers to make more healthy food and also higher taxation might lead to a reduction in the consumption of these unhealthy foods.

No incentive, either for production or for consumption of healthy food

The report further states that the lack of nutrition linked taxation means all companies lobby to put their products in the lowest GST tax slabs irrespective of its health quotient.

“Tax policies need to be carefully designed, with the highest tax slab for High Fat (or trans fats) Sugar and Salt (HFSS) foods and the lowest tax slab for reformulated and healthy products such that the consumption of HFSS food is discouraged, and at the same time people’s purchases are guided towards healthier consumption,” the report says.

The need for taxation policies to ensure that the highest tax slabs to be allotted for food that are listed under the category of High Fat Sugar and Salt (HFSS) food. The HFSS category is to be announced by the Food Safety and Standards Authority of India (FSSAI) . Almost all junk food items including cakes, sweet biscuits, pastries, doughnuts etc are usually catagorized as HFSS food items.

The WHO has also pointed out that financial subsidies should be given for makers of healthy food so as to help them to tide over their production cost and also as an encouragement for more players to enter the market. It has also recommended export incentives for food products that are in demand overseas.

“While export-linked incentives cannot be given directly, they may be smartly designed to support production,” the report states.

As of now there are separate tax slabs for various products without any unifying logic or criteria. For example, chocolate has a higher GST than sugar confectionery and all namkeens or salty snacks have the same tax slab of 12 percent irrespective of the salt content in these snacks. All carbonated sugary beverages has a 40 percent tax on them irrespective of the sugar content in them (including those with zero sugar)

The three-pronged goal of a financial regulations on ultra processed food

The report clearly states that once FSSAI formally announces the HFSS products then the GST council has to link their tax structure to the HFSS definitions and start levying taxes. The WHO has called for achieving three objectives through nutrition linked taxation and financial subsidies to the manufacturers.

  1. Incentivize manufacturers to make their products healthier for consumers.
  2. Make healthy products easily available to the consumer.
  3. Discourage production of unhealthy food products

The report also cites the examples of special consumption tax levied on sugar beverages in Portugal, Taxation on packaged food and drinks in Hungary (2011) and the Junk food tax ( 2014) imposed on food with calories in excess of 275 calories per 100 gram as examples of how financial regulations successfully made a healthy shift in the consumption of ultra processed food items.

Financial regulation without awareness will not work: Experts

The report states that the ultra-processed food sector grew at a compound annual growth rate of 13.37 percent between 2011 and 2021 despite a brief slowdown during the pandemic.  The share in retail sales volume declined from 47.7 percent in 2011 to 46.1 percent in 2021.

“Excess consumption of ultra processed food is associated with multiple health conditions mainly because of the preservatives and chemicals that are added to it during the manufacturing process,” says Dr Sayan Paul, Senior Consultant, Radiation Oncology, Apollo Cancer Centre, Kolkata. He also adds that some of the additives used in ultra processed foods have already been classified by the WHO as ‘possible carcinogens’.

“The most recent example would be that of Aspartame, the artificial sweetener used in carbonated drinks instead of natural sugar,” he adds.

However, Dr Paul points out that financial and taxation regulations might not have the desired effect if there is no health awareness among the common people. He says that regulations are fine but the public should be made to understand why these ultra processed food items are unhealthy.

“So, basically it has to be a combination of both awareness and some regulations from the government,” Dr Paul says.

Dr Banshi Saboo, Diabetologist and chair elect (South Asia), International Diabetes Federation (IDF) also has a similar take on the issue and adds that financial regulations alone will not work.

“If people are not aware why there has been a price rise, then it will not have the intended effect in the long run. People should know that this is not good for their health. On the other hand the proposal to give financial aid to manufacturers of healthy food should be welcomed,” Dr Saboo adds.

According to Lenin Raghuvanshi, food safety activist and CEO of People’s Vigilance Committee on Human Rights (PVHCR), Uttar Pradesh says that the government should focus more on food labels with more clarity on the nutrients and contents contained in packaged foods.

“Food labels with pronounced warning signs would be more effective than these additional taxes and all. The government should immediately make it mandatory for unhealthy food products to have warnings prominently like they have done in the case of tobacco products. If there is a proposal for nutrition linked tax, the they should use the revenue generated for creating better health awareness among people,” Raghuvanshi adds

Takeaways

  • Nutrition linked taxation should be implemented proposes WHO
  • The suggestion is part of its recommendations for improving the health quality of ultra processed food
  • Financial incentives for manufacturers of healthy food products have also been proposed.
  • However experts suggest that financial regulations without proper health awareness among people might have limited success.

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