Excise duty on tobacco products hailed by health advocates

Hyderabad: Doctors, economists and public health advocates have hailed the ongoing efforts of the Indian government on tobacco taxation and called for augmenting the efforts to achieve revenue and public health goals.

They welcomed the levy of excise duty on all tobacco products in the Union Budget 2019-20.

Public health organisations applauded Finance Minister Nirmala Sitharaman for bringing back excise duty on cigarettes, 'bidis' and smokeless tobacco.

They said levying excise duty on all tobacco products and retaining these in the highest tax slab in GST will ensure tobacco products do not become more affordable.

This will provide a solid foundation for reducing tobacco usage among vulnerable populations and have a long-lasting impact on the lives of the country's 268 million tobacco users.

"Even though this being a nominal increase, it sends the right message that the government is serious about reducing tobacco consumption by making it less affordable. WHO recommends that total tax burden on all tobacco products should be about 75 per cent of retail price. Therefore, there is still enough room to increase taxes on any tobacco products in India to reach the recommended rates by the WHO," said Bhavna B. Mukhopadhyay, Chief Executive, Voluntary Health Association of India.

Most of the GST compensation cess on cigarettes is specific in nature and had not been revised for the past two years. This has significantly eroded the real value of tax and has made cigarettes, 'bidis' and smokeless tobacco products highly affordable, threatening to undermine the progress in reduction of prevalence of tobacco consumption in India.

"The government should bring uniform taxes on all bidis just like cigarettes and remove exemptions given to less than 2 million units and handrolled bidis," said Dr. K Srikanth, Secretary, Indian Dental Association.

"The re-introduction of central excise duties on tobacco products will pave the way for replacing compensation cess on these products under the GST as they expire in the coming three years. Hopefully, the government will revise these duties periodically to keep the affordability of tobacco products under check as the GST rates on these products remain fixed," said Dr Rijo John, economist and health policy analyst.

Refuting the industry claims that tobacco farmers are suffering due to tax increase as being unfounded and highly misleading, these public health organisations and physicians have said that if the industry is genuinely representing farmers' interests, they should be ready to part with a higher share of their profit margins to farmers instead of exploiting them and increasing its own profits.

Tobacco kills more than 1.3 million people each year in India, home to the second greatest number of smokers in the world behind China.

Approximately, 130 million people aged 15 and older in India currently smoke and roughly half of all adults are exposed to second-hand smoke at home.