Special Correspondent

KOCHI: The Bakers’ Association Kerala (Bake) will oppose the hike in value-added tax on bakery items on the ground that it will have a disastrous impact on the bakery sector. The association, at its meeting held here on Tuesday, decided to take up the issue with the government and chalk out a protest programme.

The hike, from 4 per cent to 12.5 per cent, effective from April 1, would ultimately ruin the industry comprising mostly small and micro units, said P.M. Sankaran, president of the association. The government had extended several sops to various sectors in the State budget proposals in the wake of the economic slowdown, but the bakery sector had been subjected to a totally different treatment, he said.

Traditional sectors

Traditional sectors such as handicrafts, cashew and coir were under severe strain due to the economic downturn and the bakery sector too would face a similar situation. Some of the bakery units have already decided to close shop if the hike is not withdrawn, according to him.

The bakers were in no position to pass on the hike in tax rates to the consumers as it would spell doom to the business. The association would be ready to accept a compound tax structure which could set targets on sale that might be beneficial to the business.

The government’s action had apparently been taken to counter the illegal entry of unbranded items from neighbouring States, resulting in loss of tax revenue to the State.

While 12.5 per cent tax had been imposed on the branded items, the locally produced bakery items were charged only 4 per cent in the last financial year. nece