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Health group urges for higher taxes on bidi products under GST

IANS Feb 18, 2017

Several public health groups, including the Voluntary Health Association of India, on Thursday urged Finance Minister Arun Jaitley to ensure that all tobacco products especially bidis are taxed at uniformly high rates under the new GST framework.




The public group, which also includes Tata Memorial Hospital, says that the total tax burden currently is at 53 per cent, 19.5 per cent and 56 per cent respectively for cigarettes, bidis and smokeless tobacco in India. It is much lower than the level recommended by the WHO, which stands at 75 per cent of the tobacco retail price. 

Stating that even the Union Budget 2017-18 did not address the issue, with an effective tax increase of 6 per cent, lower than at least the 10 per cent increase witnessed in previous budgets. It said the government's taxation policies in the tobacco sector have left public health concerns unaddressed.

"I see no logic in giving tax subsidy to a product that carries a product warning that it kills. In fact, it is the cheapest and unregulated poison currently available in the market. With current tax pattern, consumer and the nation are losers, whereas handful of business families (bidi and chewing tobacco industry owners) are making vulgar profits by selling this weapon of mass destruction," said Pankaj Chaturvedi, Oncologist at Tata Memorial Hospital.

According to the group, the budget also failed to increase the excise taxes on tendu rolled hand-made bidis, which almost 98 per cent of the bidis smokers consume.

"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 per cent increase in taxes on tobacco products," said Rijo John, Assistant Professor, Indian Institute of Technology (IIT) Jodhpur, 

"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," he said.

The group said that taxation is clearly the best way to tackle the tobacco threat as reiterated by research all over the world including in India. 

It is critical that the total tax burden on tobacco under the GST regime, does not fall below the current tax burden in order to achieve revenue neutrality and maintain the current progress on public health.

India has the second largest number of tobacco users -- with 275 million people or 35 per cent of all adults in India -- in the world. At least 10 lakh die every year from tobacco related diseases. 

The total direct and indirect cost of diseases attributable to tobacco use is a staggering Rs 1.04 lakh crore ($17 billion) in 2011 or 1.16% of India's GDP. 

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