 "Illegal cigarette market grows due to high tax rates in Assam: Ficci")
Illegal cigarette industry is fast growing in Assam and is estimated at more than 25 per cent of the total cigarette market, found a Federation of Indian Chambers of Commerce and Industry (Ficci) study.
High state level taxes like VAT (value added tax) and imposition of health cess on legal cigarette industry are resulting in high prices for legal cigarettes, and are the key reasons behind an "alarming" growth of illegal cigarette industry in Assam, found the study. Most of the manufacturers of illegal cigarettes (mostly based in adjoining states of Assam and in some Northern states) evade the high central excise duty and state taxes and cess and thus are able to offer their products to consumers at rock-bottom prices. Price of illegal cigarette pack in Assam is at one fifth of the price of a legal packet which makes it very attractive to consumers, particularly youth and rural population.
"In the past few decades, leading intelligence and law-enforcement agencies around the world have found conclusive evidence of the increasing involvement of terrorist organisations in counterfeiting, piracy and smuggling activities to fund their activities. While several counterfeiting outfits are transferring portions of their proceeds to terrorist organisations, some of these are set up for the sole purpose of financing terrorism," said Deep Chand, adviser to Ficci's committee against smuggling and counterfeiting activities, while unveiling the report before media persons.
"Northeast has become a distribution centre for the rest of the country for cheap smuggled cigarettes originating in the neighbouring countries. All these smuggled cigarettes are transported from Assam and other Northeastern states to rest of the country by air, bus and train. Such illegal cigarettes totally defeat the tobacco control objectives of the government as they neither bear any health warnings required as per Indian laws nor have other mandatory declarations like MRP, date of manufacture or place of manufacture," the study said.
Moreover, the study found that steep increase in VAT on cigarettes has rather resulted in revenue loss for the state's exchequer as that has resulted in growth of illegal cigarette market. "This has resulted in a loss of state revenue from the cigarette industry by over 50 per cent ever since the VAT rate on cigarettes was increased. It is thus clear that the objective of increasing revenue from the cigarette industry in the state with a steep increase in VAT and imposition of health cess has been soundly defeated," it said.
High state level taxes like VAT (value added tax) and imposition of health cess on legal cigarette industry are resulting in high prices for legal cigarettes, and are the key reasons behind an "alarming" growth of illegal cigarette industry in Assam, found the study. Most of the manufacturers of illegal cigarettes (mostly based in adjoining states of Assam and in some Northern states) evade the high central excise duty and state taxes and cess and thus are able to offer their products to consumers at rock-bottom prices. Price of illegal cigarette pack in Assam is at one fifth of the price of a legal packet which makes it very attractive to consumers, particularly youth and rural population.
"In the past few decades, leading intelligence and law-enforcement agencies around the world have found conclusive evidence of the increasing involvement of terrorist organisations in counterfeiting, piracy and smuggling activities to fund their activities. While several counterfeiting outfits are transferring portions of their proceeds to terrorist organisations, some of these are set up for the sole purpose of financing terrorism," said Deep Chand, adviser to Ficci's committee against smuggling and counterfeiting activities, while unveiling the report before media persons.
More From This Section
Smuggled international contraband cigarettes are another big menace contributing significantly to the alarming growth of illegal cigarette industry in Assam. The state shares a porous international border with Bangladesh. In addition, other states in Northeast also share similar border with Myanmar, Bangladesh, China etc. Therefore there is a sizeable influx of cheap king-sized smuggled cigarettes from countries like Bangladesh, China and Myanmar into Assam, found the study.
"Northeast has become a distribution centre for the rest of the country for cheap smuggled cigarettes originating in the neighbouring countries. All these smuggled cigarettes are transported from Assam and other Northeastern states to rest of the country by air, bus and train. Such illegal cigarettes totally defeat the tobacco control objectives of the government as they neither bear any health warnings required as per Indian laws nor have other mandatory declarations like MRP, date of manufacture or place of manufacture," the study said.
Moreover, the study found that steep increase in VAT on cigarettes has rather resulted in revenue loss for the state's exchequer as that has resulted in growth of illegal cigarette market. "This has resulted in a loss of state revenue from the cigarette industry by over 50 per cent ever since the VAT rate on cigarettes was increased. It is thus clear that the objective of increasing revenue from the cigarette industry in the state with a steep increase in VAT and imposition of health cess has been soundly defeated," it said.