 "AP in a fix over proposal to hike tax on cigarettes")
“The empowered committee has asked the states to raise the tax (VAT) on cigarettes to 60 per cent in a measure to discourage smoking. But Andhra is not only one of the major tobacco growing states in India but also predominantly produces the varieties that are used in cigarettes. Any drastic rise in taxes on these products will impact the farmers and acreage in the state,” a senior finance ministry official said on Thursday.
Andhra Pradesh currently levies 20 per cent VAT on cigarettes. Increase in excise duty on the same by the Union finance minister in the recent Budget has already made the tobacco farmer lobbies jittery over the likely impact on prices and demand. Further, tax hikes would impact the farming, which has already been hit by slowing exports, say farmer bodies.
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“The government is yet to take a decision in this regard. Chief minister N Kiran Kumar Reddy, who handles the subject, is expected to hold a meeting with the officials soon,” the official said.
The Tobacco Board had fixed the crop size in Andhra Pradesh at 162 million kg for 2012-13 as compared with 98 million kg in Karnataka.
While representatives from tobacco growing districts such as Guntur and Prakasam have started lobbying with the government against any move to raise taxes on cigarettes, several non-governmental organisations are also approaching the government seeking increase in taxes on tobacco products, according to the official.
A recent study conducted by the Asian Development Bank (ADB) suggested that a 50 per cent hike in prices by India, China, the Philippines, Thailand and Vietnam corresponding to a tax increase of about 70 per cent to 122 per cent would reduce the number of current and future smokers by close to 67 million and reduce tobacco deaths by over 27 million.