The GST Council (Goods and Service Tax) recently announced a bewildering array of extra tax rates for popcorn, sparking an understandable backlash among economists, businesses, and consumers alike. Salted and spiced popcorn is taxed at 5 per cent if loose, 12 per cent if prepackaged and labelled, and 18 per cent if caramelized. While intended for clarity, this new classification has done more harm than good, causing confusion, adding up needless compliance costs, and leaving consumers bearing the brunt of the damage in the form of higher prices and fewer choices.

The GST system was introduced with the promise of a “Good and Simple Tax.” Yet decisions like this demonstrate how far it has deviated from that vision. Former Chief Economic Adviser K.V. Subramanian aptly summarized the situation: “Complexity is a bureaucrat’s delight and citizens’ nightmare.” The popcorn tax serves as a perfect example of this. A simple grocery store or movie theatre purchase now comes with a dilemma. Is the popcorn pre-packaged? Is it salted or caramel? Each of these questions determines the tax rate and, ultimately, what consumers pay at the counter. These convoluted policies hit the middle and lowerincome groups the hardest, where a small price hike on household essentials can significantly impact budgets.

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As one social media user pointed out, this could pave the way for taxing entire restaurant menus differently based on ingredients. Such granular taxation complicates compliance and restricts consumer freedom by penalizing certain choices over others. Moreover, this fragmented approach disproportionately affects small businesses. Smaller popcorn manufacturers and vendors, already operating on thin margins, now face additional compliance burdens. For many, this could mean passing costs onto consumers or shutting down altogether, further reducing options in the market. The popcorn tax exposes a deeprooted issue within India’s GST structure: the strong obsession with micromanagement and over-classification. Taxation should be neutral, refraining distortions that favour one service or product over another. Instead, policies like these fail to regard consumers, the very individuals the tax system is meant to serve.

The GST Council’s decision also raises concerns about transparency and accountability. While the Council justifies that caramel popcorn falls under the “sugar confectionery” category, critics highlighted the inconsistencies in its classification rationale. For instance, previous rulings on similar products have applied lower tax rates despite the presence of added sugar. The popcorn tax isn’t just about popcorn; it’s a symptom of underlying issues plaguing India’s GST system. It highlights the need for a transparent, simplified, and consumercentric tax regime that emphasizes fairness and minimizes bureaucratic complexity. India’s popcorn tax fiasco is not without precedent. Positive examples from other countries highlight how unnecessary India’s GST policy is. New Zealand’s Goods and Services Tax system is often hailed as one of the simplest in the world. Unlike India’s fragmented approach, New Zealand applies a flat GST rate across almost all goods and services, with very few exemptions. This simplicity reduces compliance costs for businesses and ensures that consumers are not burdened with hidden or arbitrary price hikes. The contrast is stark. Where India’s GST causes confusion and inefficiency, New Zealand’s straightforward model fosters fairness and transparency.

The lesson is simple: a streamlined tax system benefits everyone from businesses and policymakers to consumers. The popcorn tax, criticized by industry experts and economists, is just another example of how complex classifications can stifle consumer choice. Indian policymakers should take notes from New Zealand’s playbook. By removing excessive classifications and simplifying tax rates, GST can finally live up to its promise of being a “Good and Simple Tax.” Until then, consumers will bear the brunt of a system that favors bureaucracy over practicality. (The writer is an Indian Policy Associate, Consumer Choice Center)