Opinion: Rajasthan’s move to cut tax on tobacco products a retrograde step

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New Delhi | Updated: July 14, 2015 1:12:51 PM

If money has to be raised in public interest, there are better ways to do it than cutting taxes on tobacco products

tax on tobaccoRajasthan has slashed taxes on tobacco products like cigarettes and gutka by as much as 20 per cent. (Reuters)

Santosh-TiwariFor a state which is spearheading reforms in the country, this could be an ultimate retrograde step. Rajasthan has slashed taxes on tobacco products like cigarettes and gutka by as much as 20 per cent. This is after it was honoured recently by the World Health Organisation for being tough on tobacco products by keeping the tax rates among the highest in India.

As reported by The Indian Express today: In an order passed on Friday last week, the state government reduced VAT on “tobacco and its products excluding bidi” to 45 per cent, from the existing 65 per cent, saying it was “expedient to do so in public interest”.

It is difficult to understand what public interest it serves in a country which witnesses 10 lakh deaths every year due to tobacco-related diseases.

This is a bad example set by a state that is being seen as the number one state in terms of initiating reforms in critical areas like labour, land acquisition, financial inclusion and education to help people raise their living standards.

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If the Rajasthan government needs revenues, there are better ways to raise it than promoting the use of tobacco products – reducing taxes does that exactly. Instead of this, the state should invest its efforts in ensuring that it benefits from the relaxation in labour laws.

The Land Acquisition Bill proposed by the state is also a move that will help attract industry in Rajasthan once it gets passed in the Assembly and gets the centre’s approval. The select committee has already given its report on the Bill that seeks to do away with the contentious social impact assessment clause and assures higher compensation for the landowners.

Improvement in the school education system is another area where Rajasthan has taken a lead in bridging the gap between the private and government schools.

Then, it is also doing good work through the Bhamashah scheme for improving the financial capabilities of women in the state. Lowering taxes on tobacco products is out of sync with these reform initiatives and Rajasthan must reverse this decision fast.

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