Meghalaya decision to hike tobacco tax ruffles traders body

With Meghalaya Chief Minister Mukul Sangma announcing a 7 per cent hike in tax on tobacco and its products, traders in the state are a worried lot.
The traders apprehend the hike would encourage influx of cheaper products manufactured in neighbouring Bangladesh and Myanmar.
"This would have an impact on at least 30,000 traders involved in direct and indirect sales of the products in the state, the second highest revenue generating product after alcohol," Rajem Rapsang, one of the traders, told PTI.
He said high tax on cigarettes would force their prices to go up triggering rise in price differential as compared to those manufactured in neighbouring Bangladesh and Myanmar.

"The situation is such that smuggling and illegal trading will take place thereby rendering the legal traders to suffer," he said.
Already, cigarettes from Bangladesh are available in certain market pockets in the state which were being smuggled from across the porous international border, another trader Swapan Kumar Dey said.

Further increase in tax on tobacco and similar products would only reduce the revenue of the state as was the case with Tripura and Assam, which he said, suffered 15 per cent slash in revenue after hiking tax to 35 and 30 per cent respectively.
Pleading with the state government to roll back the tax hike to its previous 20 per cent, another trader Bablu Das said Tripura had learnt the futility of the hike it announced in 2013 after the revenue dropped by 15 per cent.

"After rolling back the tax hike, there was reduction in illegal stock inflow and increase in tax revenue by at least 120 per cent in the last couple of months," Das said.
In his budget speech, Mukul Sangma announced a seven per cent hike from the current 20 per cent in tobacco, the third highest tax imposed on tobacco and similar products after Tripura and Assam, in the region.