India’s decision to impose a three-tiered tax system on popcorn based on its sugar or spice content has sparked outrage during the holiday shopping season. Social media users quickly mocked the move, while experts warned that it highlights deeper issues within the country’s complicated tax system.
On Saturday, the Goods and Services Tax (GST) Council, led by Finance Minister Nirmala Sitharaman and including state representatives, announced that non-branded popcorn mixed with salt and spices would be taxed at 5%, pre-packaged and branded popcorn at 12%, and caramel popcorn, classified as a sugar confectionery, at 18%. The announcement came into effect immediately.
The tax decision quickly became a target for online criticism, with many voicing frustration over the country’s complex regulations and high taxation. A now-deleted Reddit post by a startup founder went viral, where the founder complained about excessive taxes even on something as simple as popcorn and urged people to consider leaving the country. Memes poking fun at the situation spread rapidly, one of which showed people kneeling before Sitharaman holding bags of popcorn.
“Even popcorn reaches 18% GST slab. Next, she’ll tax air and sunlight,” one user sarcastically posted. Another joked: “India’s tax system: turning popcorn into a luxury item one kernel at a time. 5% for salt, 18% for caramel – might as well declare butter popcorn as ‘imported goods’ next.”
India’s GST, introduced in 2017, is an indirect tax designed to streamline the taxation of goods and services, eliminating the cascading effect of multiple taxes. While the aim was to simplify the tax structure and boost India’s role in global supply chains, experts argue that the system is still far from the simplicity it was intended to provide.
Supporters of the ruling Bharatiya Janata Party defended the government, dismissing critics as being out of touch with the country’s broader economic issues. One social media post read: “Only 2.2% of Indians pay income tax. Beware of people crying about taxes and #PopcornTax on the internet. Most of them have neither paid income tax nor bought popcorn at theatres. They are trying to make you feel bad about your country.”
In defense of the new tax structure, Finance Minister Sitharaman explained that products with added sugar, such as caramel popcorn, were taxed at a higher rate due to their classification as sugary confectioneries.
The GST Council also raised the tax on used cars from 12% to 18%, further stoking public discontent.
Opposition leaders seized the opportunity to criticize the government. Jairam Ramesh, a senior spokesperson for the Congress party, condemned the complexity of the tax system, suggesting that the high levels of tax evasion and the prevalence of fake companies are symptoms of a broken system. Ramesh noted that the confusion over the three-tiered popcorn tax was only a small part of a much larger issue.
“The absurdity of three different tax slabs for popcorn under GST, which has unleashed a wave of memes, only brings to light a deeper issue: the growing complexity of a system that was supposed to be a Good and Simple Tax,” Ramesh wrote on social media.
Experts, too, have called for administrative reforms to simplify the tax system. Lloyd Mathias, a New Delhi-based business strategist, criticized the GST Council’s frequent meetings to adjust taxes, calling it a sign of disorganization rather than progress. “It has become focused on non-essential items,” Mathias said, suggesting that there should be only two tax tiers: one for luxury goods and another for everything else.
Mathias argued that a simpler system would improve revenue collection and make the tax system more acceptable to the public.
On the other hand, Sweta Rajan, a partner at Economic Laws Practice, defended the government’s long-term efforts to simplify taxation. “The government’s intention, right from day one, has been to create a more streamlined tax system, and in many respects, they have made progress,” Rajan said.
However, she also acknowledged that too much government intervention in classifying and taxing products is contributing to confusion. Rajan pointed out that the authorities’ efforts to avoid litigation, amid a backlog of tax cases, may be contributing to the complexity. “It may take a few years for procedural issues to stabilize,” she added.
The controversy surrounding the popcorn tax comes amid a slowdown in India’s economy. In the July-September quarter, India’s GDP growth hit a seven-quarter low of 5.4%, largely due to weak consumption. The government has been working to boost manufacturing and reduce the economy’s reliance on services like IT. Over the past few years, it has introduced production-linked incentives for sectors ranging from electronics to mobile phones, as well as increased infrastructure development.
But experts like Biswajit Dhar, a distinguished professor at Delhi’s Council for Social Development, argued that the focus should be on creating jobs and boosting domestic consumption, rather than constantly adjusting tax rates. “Increasing supplies when demand is weak is a recipe for disaster,” Dhar said. “Tinkering with existing taxes without a coherent strategy to tax the affluent won’t create a sustainable revenue stream.”
The debate over the popcorn tax underscores ongoing concerns about India’s tax system, which continues to face criticism for being overly complex and difficult to navigate.
