SRINAGAR: Various leading public health groups Thursday urged the Union and the state governments to ensure that all tobacco products especially bidis, are placed in the demerit good category. The health groups demanded that bidis be taxed at 28% under the new GT regime. The rights groups demanded that tobacco and bidis may be treated with an additional levy of the highest possible rate of cess. These groups also strongly recommended that tobacco products including bidis should be taxed at uniformly high rates under the new indirect tax framework expected to kick in from July 1, this year.
Importantly, the move is viewed as significant as it comes just days ahead of the GST council meet which is expected to discuss the rate slabs for different goods and services under the GST mechanism. The GST council meets on February 18. With the total tax burden currently at 53%, 19.5% and 56% respectively for cigarettes, bidis and smokeless forms, tobacco taxation in India is much lower than the level recommended by the WHO, according to which the tax burden should represent at least 75% of the retail price.
“The union budget 2017-18 also did not address this anomaly with an effective tax increase of 6%, lower than atleast the 10% increase witnessed in previous budgets,” the rights groups said in a joint statement released here. Pertinently, with 10 lakh tobacco triggered deaths every year, public health advocates believe that the government’s taxation policies in the tobacco sector have left public health concerns unaddressed.
“Classifying different tobacco products in lower rate GST slabs will be a distortion and will send a wrong message and promote the use of products like bidis. Bidis are the most commonly used tobacco product in India, accounting for 64% of all tobacco consumption and are disproportionately consumed by the poor. Bidis contribute to the majority of the 10 lakh deaths attributable to tobacco as well as the staggering economic burden caused by tobacco use,” the statement added.
“The excise increase proposed on tobacco products in the recent Union Budget of 2017-18 fell far short of even previous budgets, since the proposed increase in Additional Duties of Excise and Basic Excise duties (BED) on various tobacco products amounted to an increase of only 6% in the current budget,” the statement claimed.
Most importantly like earlier years, the budget also failed to increase the excise taxes on tendu rolled hand-made bidis which almost 98% of the bidis smokers consume instead increasing it on paper-rolled bidis which has a negligible market share – once again keeping bidis a very affordable and practically unregulated poison for its 67.5 million bidi users.
“The tobacco industry knows how to exploit its consumers and this is why it increases prices much more than the tax increases that the government proposes every year. It is unfortunate that the government doesn’t take a cue from this and increase taxes on tobacco products substantially. As against a normally expected 10%-15% increase in taxes on tobacco products, a mere increase of 6% announced in the budget is a boon to the tobacco industry. Unless corrective measures are taken in the impending GST by bringing all tobacco products under the highest demerit rate of 28% + the highest possible cess, it would be a severe blow to the public health in India,” said Dr. Rijo John, Assistant Professor, IIT Jodhpur. John is an expert on tobacco taxation.
Interestingly, India has the second largest number of tobacco users (275 million or 35% of all adults in India) in the world – of these at least 10 lakh die every year from tobacco related diseases. The total direct and indirect cost of diseases attributable to tobacco use was a staggering Rupees 1.04 lakh crore ($17 billion) in 2011 or 1.16% of India’s GDP.
“At least a 10% increase in the effective excise on tobacco product has almost been a norm in the past several years and a mere 6% increase was a boon for the tobacco industry and a major setback for the public health interests. We hope that the honorable Finance Minister will ensure a significant increase in tobacco taxation and decrease in the affordability of tobacco products while finalizing the GST reform,” Bhavna Mukhopadhyay, CEO, Voluntary Health Association of India (VHAI), said.