Representative image
Representative image

Civil society groups laud govt's efforts on tobacco taxation

ANI | Updated: Jul 02, 2019 22:09 IST

Panaji (Goa) [India], July 2 (ANI): Several civil society groups across India lauded the ongoing efforts of the government on tobacco taxation and have endorsed the decision to include cigarettes and smokeless tobacco in the highest tax slab for its long-lasting negative impact on the lives of its users.
These organisations have emphasised the need for constant review and increase in tobacco taxation rates to ensure tobacco and its products do not become more affordable.
In spite of the positive moves of the government in 2017, the present GST rates combined with the compensation cess for all tobacco products is far below the recommended level of the tax burden (taxes as a percentage of final tax inclusive of the retail price) of 75 per cent by the WHO (World Health Organization).
The total tax burden is currently only about 53 per cent for cigarettes, 22 per cent for bidis and 60 per cent for smokeless tobacco in the country.
"Contrary to the claims made by the tobacco industry, the overall tax rate on all tobacco products in India is still low very compared to other middle-income countries. This encourages tobacco consumption. By categorizing cigarettes and smokeless tobacco as demerit goods under GST and levying the highest GST rate of 28 per cent plus cess on these, the Government of India has prevented millions of youth from tobacco initiation and lifelong addiction. GST Council must also impose a compensation cess on bidis like that on cigarettes and smokeless tobacco as this is widely consumed by weaker sections of the society," Ashim Sanyal, Chief Operating Officer, Consumer VOICE organisation said.

As per Dr Shekhar Salkar, Secretary, National Organisation for Tobacco Eradication (NOTE), tobacco usage has many ill effects and leads to the death of more than one million Indians every year.
"Tobacco use imposes enormous health and economic burden on the country. Each year, over 1 million Indians die from tobacco-related diseases in India. This is besides the enormous treatment costs which shatters the families of the patients. Higher prices will bring down the consumption drastically. I hope that the government tax all the tobacco products at a very high rate to ensure it discourages mass consumption," Salkar said.

They further said it is well known that most tobacco farmers are caught in a vicious cycle of debt by the organised tobacco industry through long term loans with high interest rates.

Most of the GST compensation cess on cigarettes is specific in nature and has not been revised for the past two years. This has significantly eroded the real value of tax and has made cigarettes highly affordable, threatening to undermine the progress in reduction of the prevalence of smoking.
It also urged the government to give a compensation cess on bidis like that on cigarettes and smokeless tobacco, to make a more rationalised tobacco taxation system. (ANI)