Guwahati Today

'Impose highest possible tax on tobacco'

Sentinel Digital Desk

By our Staff Reporter

GUWAHATI, Oct 17: The Voluntary Health Association of Assam (VHAA), an NGO, has appealed to the GST Council to recommend and accept the highest possible tax rate under GST with a provision for states’ right to impose top-up taxes on all types of tobacco, including cigarettes, bidis, smokeless tobacco and pan masala to discourage their consumption and addiction amongst Indians and safeguard public health.

It has been proven globally that the most direct and effective method for reducing tobacco consumption is to increase their price through tax increases. Higher taxes are particularly effective in reducing tobacco use among vulnerable populations, such as youth, pregnt women, and low-income smokers. An increase in tobacco prices by 10 per cent decreases tobacco consumption by 4 per cent in high-income countries and by about 6 per cent in low-and-middle-income countries.

In statement issued to the press, the organization stated that the current taxation system differentiates between various forms of tobacco products while imposing taxes. Bidi smoking is considered to cause about 2-3 times greater nicotine and tar inhalation than cigarettes, due to the poor combustibility of the bidi wrapper and greater puff frequency needed to keep the bidi alight.

VHAA executive secretary Ruchira Neog said distinguishing tobacco products with different GST rates would idvertently pass the wrong message that some tobacco products are less harmful than the other. “Hence we appeals to the GST Council that all tobacco products, including bidis, be taxed at the highest rate under GST with imposition of an additiol central excise duty and a provision for states’ right to impose top-up taxes be retained,” said Neog.

According to Dr. Rijo John of IIT Jodhpur, “A recent report from WHO shows that current cigarette taxes as a percentage of retail prices in India are lower than even neighbouring countries such as Sri Lanka and Bangladesh and ranked 80th in the world. A 40 per cent GST rates + central excise duty at the current levels would just about maintain the current tax burden on tobacco products. It is also important to allow states to maintain their right to impose top-up taxes on tobacco products, in order to actually make tobacco and tobacco products less affordable over time.”

Dr. John Rijo has been working on tobacco taxation and has been the co-author of various reports and studies on tobacco taxation.

According to the 2015 WHO Report on the Global Tobacco Epidemic, India is one among the very few countries where cigarettes have become more affordable over the past few years – not getting the treatment of tobacco products right under the new GST system will only make matters worse and cause many more premature deaths.

Even as the industry is opposing the recommendations to impose the ‘sin tax’ rate of 40 per cent on tobacco, it is important to note that tobacco taxation in India is way below global standards. The current rates for even cigarettes and smokeless is significantly less than that recommended by the World Bank’s 2/3rd (tax should be 67% of retail product price) and the WHO (tobacco excise taxes should account for at least 70% of the retail price).[i]

President of the Assam Branch of the Indian Dental Association (IDA) Dr. Ravindar Singh said, “The GST regime should ideally act as a deterrent to the consumption of health hazard causing substances such as cigarettes, bidis etc., through higher taxes. All differentiations should be done away with regards to tobacco and tobacco products and taxed at the highest slab under GST, since lower GST rates would contribute to their affordability and end up promoting their increased consumption amongst most vulnerable sections of population pushing them below the poverty line.”

Bidis which comprise 48 per cent of the tobacco market, (as compared to chewing tobacco which is 38 per cent and cigarettes 14 per cent) have been subjected to very low central and state taxes under the false pretext of protecting bidi rollers’ livelihood. However, the reality is that low taxes and exemptions only benefit the bidi industry owners.