Tobacco Toll

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Published: July 10, 2015 12:15:00 AM

Rising affordability of tobacco in India is a huge concern. The govt must fix its taxation to deter usage

Clearly, India hasn’t got it right on curbing tobacco usage yet. As a recently released WHO report on taxation of tobacco highlights, the affordability of tobacco in the country has risen by 15% between 2008 and 2014, thanks to the increase in taxes on tobacco being too modest to offset the growth in consumers’ purchasing power. The WHO report also points out that India’s differential tax structure for cigarettes have ensured loopholes that undermine efforts to curb consumption—while the WHO recommends that the tax on cigarettes be almost 75% of the price of the packet, in India, the VAT on cigarettes varies from as low as 12.5% to 45%.

India’s problem is further compounded given nearly 84% of smokers in the country smoke bidis—which are taxed at a much lower rate than cigarettes—while 12% smoke cigarettes. Add to that the somkeless tobacco consumption figures, and it is no surprise that the cost of tobacco-related diseases in the age group of 35-69 was R1 lakh crore in 2011, nearly equal to India’s entire public health expenditure. But how far the government would act, through tax measures or otherwise, to bring down tobacco consumption—given the R28,000 crore in tax revenues and the Rs 6,000 in forex earnings from the industry as also the 6 million tobacco farmers and the 5 million bidi-rollers—seems to be a difficult question to answer.

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