Coca-Cola May Shut Down Some Factories If The Sin Tax On Carbonated Drinks Is Approved

A couple of weeks ago, we told you about the proposal to implement a ‘sin tax’ on aerated drinks in India, that was welcomed by health advocates. Now, beverage manufacturing giant Coca-Cola has announced that should this happen, it may have to shut a large number of its Indian factories.

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The Sin Tax

In case you didn’t read our earlier piece, here’s  little background. A sin tax is an extra, often steep price levied on products that are considered to be harmful, such as tobacco and alcohol, to encourage consumers to purchase less of them.

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In a recommendation ahead of changes to the GST, India’s chief economic advisor, Arvind Subramanian suggested that some items, including carbonated drinks should carry a 40% tax. Many health advocates argue this will benefit the Indian population and help curb health problems like obesity.

Coca-Cola’s Response

In response to the proposed sin tax, Coca-Cola released a statement commenting that “it will lead to a sharp decline in consumer purchases. In these circumstances, we will have no option but to consider shutting down certain factories.”

At present, Coca-Cola employs some 250,000 individuals and maintains 57 factories.

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The company has dispatched a spokesperson on its behalf to discuss problems that may arise due to the tax. “The Coca-Cola Company believes in India and identifies it as one of its growth markets,” the company said in the press statement. Additionally, Coca-Cola argues that the tax will result in loss of revenue in the public, as well as a loss of employment if they are forced to shut down factories.

It remains to be seen how the government will respond to Coca-Cola’s concerns.