CLPF for cess increase on tobacco products

Guwahati, Oct 14: Consumer groups along with health groups, doctors and economists are urging the Group of Ministers (GoM) in the GST Council to increase cess on tobacco products for raising the much needed disaster remediation revenue, a CLPF release stated.

Appreciating the leadership and vision of the GST Council to help Kerala raise funds for rehabilitation of its people affected by the recent floods, the group is suggesting, raising cess on tobacco products to address the crisis facing the citizens of Kerala. Imposing cess on all tobacco products to raise revenue for disaster relief is a win-win as it will save lives by reducing consumption across India and save lives affected by the natural calamity. Global experience around the world has shown that even while such a tax increase will decrease use, government revenue will increase, the release said.

“Imposing additional cess on all tobacco products, including bidis, will be a huge win for public health and revenue generation. This move will provide much needed relief to the people of Kerala while motivating millions of tobacco users to quit and preventing youngsters from initiating tobacco use,” said Ashim Sanyal of Consumer Voice.

WHO recommends that countries impose tobacco excise taxes that amount to at least 75% or more of retail price to achieve the dual objective of reducing tobacco use and increasing government revenue. The overall tax rate on all tobacco products in India is still low very compared to other middle-income countries including those in South Asia. In spite of industry claims to the contrary, GST has made no significant increase in the tax burden of tobacco products, especially cigarettes and has in fact made all products more affordable. Tax burden on bidis post-GST is only 22% compared to 53% for cigarettes and about 60% for smokeless tobacco. All of these are well below the WHO recommended rate of 75%, the release added.