Cheaper vada pav? Not really

Pay less tax on vada pav sold in restaurants, says State Finance Minister, but how many of us really ever buy one from a restaurant?

Cheaper vada pav? Not really

Pay less tax on vada pav sold in restaurants, u00a0says State Finance Minister, but how many of us really ever buy one from a restaurant?

In his budget speech on Tuesday, as State Finance Minister Ajit Pawar pointed out the obvious "Vada pav is a popular snack for people in the state" he announced a tax cut on the humble street food. "I propose to reduce the rate of tax on vada pav sold in restaurants to 5 per cent (from 12.5 per cent)," he said.

The Minister's offer may have endeavoured to win Mumbaikars over with its generosity. But his ploy to appease his vote bank by trimming taxes on the snack that is hardly sold in restaurants has restaurateurs incredulous.

"How can you expect the price of vada pav to come down? As it is, not many are sold in restaurants. Even if they are, rates in restaurants do not fluctuate with the ups and downs in taxes and general prices.
u00a0
So now if there is a tax cut for the vada pav, it need not imply that hoteliers will reduce their prices," said VN Prabhu, a restaurant-owner.u00a0

Across the state, vada pavs are mostly sold at street stalls (free from the obligation of paying value added tax) and not in hotels and restaurants (which do pay VAT). And since there is no inherent price reduction, the prices are unlikely to be affected.

Those in the trade are not shying away from pointing out this incongruity in the populous move, brought on either by genuine oversight or overt optimism in Mumbaikars' credulousness. They fail to see how the tax reduction will make the snack cheaper.

Chandrahas Shetty, member of Restaurant and Hotel Owners Association and also its advisor, said, "Vada pav is rarely sold in restaurants.

Throughout the state, it is commonly sold by street vendors on mobile stalls who do not pay VAT. As prices haven't reduced, the reduction in taxes will just give relief to manufacturers who may not pass it on to the consumer."

Drinks pricier

While the government wants vada pav to be cheaper, it has increased the rate of tax on carbonated drinks, from 12.5 per cent to 20 per cent. This would mean your Pepsi and Coke will cost you more.
And it is not just the soft drinks.

The state government has no good news for consumers of alcohol either. It seeks to increase the excise duty on hard drinks sold in the state to Rs 95 per proof litre for country liquor, Rs 240 per proof litre for foreign liquor, Rs 33 per bulk litre for mild beer, and Rs 42 per bulk litre for fermented beer.

And with the minister's proposal to raise tax rate on goggles not normally used as corrective spectacles to 12.5 per cent, you can expect to have no respite from the bright hot sun this summer.

Bakery products

On edibles though, the state government brings some good tidings. In announcement welcomed by bakery owners, the state has proposed to increase the turnover limit of bakeries from Rs 30 lakh to Rs 50 lakh for those who avail of the composition scheme in payment of taxes. This according to the government will provide relief to small bakeries.

Dry fruits

The state also seems to have heard the pleas of dry fruit traders and proposed to reduce the tax rate on them (with the exception of raisins, currants and cashews) to five per cent.

MiD DAY was the only newspaper to report on the problems faced by dry fruit traders due to high taxes ('Dry spell for dry fruits', October 25, 2010, and 'Dry fruit prices will drive you nuts', August 17, 2010)

2 lakh
The number of vada pavs consumed daily by Mumbaikars