The Hindu : Surprise over plan to tax processed salt

Online edition of India's National Newspaper
Thursday, Apr 03, 2003

Southern States

Southern States - Karnataka-Bangalore

Surprise over plan to tax processed salt

By Our Special Correspondent

Bangalore April 2. The now deferred Value-added Tax (VAT) regime will levy a four per cent tax on processed salt, a move that has surprised trade circles.

Salt has remained tax free from the time of the interim government headed by Jawaharlal Nehru.

Mahatma Gandhi's march to Dandi and the symbolic protest against the tax on salt had its echo in the South in Rajaji's march to Vedaranyam. No government in independent India dreamt of taxing this commodity.

The VAT system broadly divides goods into three tax slabs, with items termed essential, semi-essential, and non-essential.

The essentials include milk and vegetables, which are tax-free, but salt, the most essential item at home, is to be taxed. Unprocessed salt remains exempt from tax.

This apparent oversight of placing processed salt in the four per cent slab and unprocessed salt in the exempt category is likely to have serious ramifications. It goes against the national policy of promoting iodised salt as a healthier alternative.

Salt is a "critical component" in every household. The Indian Salt Manufacturers' Association terms tax on processed salt as a tax on purity. Processed salt is the result of removing impurities such as mud, clay and sand, and fortifying it with iodine. Processed, branded salt provides homes with better and cleaner salt. The more salt is processed the higher is the stability of iodine.

The move to promote iodised salt stemmed from public health concerns. Iodine deficiency is known to cause various disorders. It is the single most common cause of preventable mental retardation and brain damage. It increases child mortality, causes goitre, and affects growth.

Iodine deficiency in pregnant women is a cause for miscarriage and other complications. Globally, 2.2 billion people (38 per cent of the world's population) are estimated to live in areas with iodine deficiency.

Iodine deficiency is common in India, and nearly 270 million people are exposed to the risk of iodine deficiency disorders, 70 million suffer from goitre, and 2.2 million from cretinism, severe mental, and physical disability caused by a deficient thyroid gland.

Healthcare planners and nutritionists acknowledge iodised salt as the best counter to iodine deficiency. Iodised salt, an article of daily consumption, is among the most affordable, convenient, and richest sources.

Placing processed salt in the four per cent tax slab will also affect the multiple small players doing their best to provide processed salt to consumers. According to a survey, over 60 per cent of the branded salt segment is dominated by local brands.

The discriminatory taxing of branded products goes against the national policy which clearly states that no distinction should be made between the branded and unbranded segments.

Some States like Gujarat have already said they will not tax processed salt.

The Karnataka Government's decision is eagerly awaited by the trade sector.

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