Appeal to GST Council for highest tobacco tax

Tobacco Free Kerala, a state-based outfit, along with other tobacco control groups in the country, have appealed for the highest tax on tobacco to the GST council.

The request was made in view of the 2015 World Health Organisation (WHO) Global Tobacco Epidemic Report that finds India to be among the very few countries where cigarettes have become more affordable over the past years.

The appeal is for the highest possible tax rate under GST on all types of tobacco including cigarettes, bidis, smokeless tobacco, and pan masala in order to discourage their consumption and addiction amongst Indians and safeguard public health, a release said here today.
 

This is in the light of the WHO's articulation that the most direct and effective method for reducing tobacco consumption is to increase their price through tax increases.

Higher taxes are particularly effective in reducing tobacco use among vulnerable populations, such as youth, pregnant women, and low-income smokers, it said.

An increase in tobacco prices by 10 per cent decreases tobacco consumption by 4 per cent in high-income countries and by about 6 per cent in low-and middle-income countries, it said.

India has the second largest number of tobacco users in the world with 275 million or 35 per cent of all adults in India.

According to Dr Rijo John of IIT Jodhpur, "A recent report from WHO shows that current cigarette taxes as a percentage of retail prices in India are lower than even neighbouring countries such as Sri Lanka and Bangladesh and rank 80th in the world."

GST at 40 per cent, coupled with Central Excise Duty at the current levels, would just about maintain the current tax burden on tobacco products, he said.

"It is also important to allow states to maintain their right to impose top-up taxes on tobacco products, in order to actually make tobacco and tobacco products less affordable over time." he added.

Shri Ashim Sanyal, Chief Operating Officer, Consumer Voice, a voluntary consumer organisation said "the GST regime should ideally act as a deterrent to the consumption of health hazard causing substances such as cigarettes and bidis through higher taxes under GST without any differentiation in the interest of vulnerable sections.