Consumer voice Urge Union Finance Minister to Tax All Tobacco Products

BY Tricitynews Reporter

Chandigarh 16^th February:- Ahead of a crucial GST Council meeting to be held on February 18, 2016, Consumer VOICE, a leading national consumer organization have reached out to the union Finance Minister Arun Jaitley and his key advisers, urging them to ensure that ALL tobacco products especially bidis, are placed in the demerit good category at the 28% GST rate with an additional levy of the highest possible rate of cess. Citizen Awareness Group, a partner organization of Consumer VOICE is actively supporting and working on Tobacco Control Intervention from the state of Punjab. These Consumer Organizations have also strongly recommended that tobacco products including bidis should be taxed at uniformly high rates under the new indirect tax framework expected to kick in from July 1. The move is significant as it comes just days ahead of the GST council meet which is expected to discuss the rate slabs for different goods and services under the GST mechanism.

In Punjab the percentage of tobacco usage is 11.7% of adults;21.6% of males and 0.5% of females.

According to Dr. Rijo John, Assistant Professor, IIT Jodhpur that as against a normally expected 10%-15% increase in taxes on tobacco products, a mere increase of 6% announced in the budget is a boon to the tobacco industry. Unless corrective measures are taken in the impending GST by bringing all tobacco products under the highest demerit rate of 28% + the highest possible cess, it would be a severe blow to the public health in India.

Bidis are the most commonly used tobacco product in India, accounting for 64% of all tobacco consumption and are disproportionately consumed by the poor.  Bidis contribute to the majority of the 10 lakh deaths attributable to tobacco as well as the staggering economic burden caused by tobacco use. Classifying different tobacco products in lower rate GST slabs will be a distortion and will send a wrong message and promote the use of products like bidis.

Ashim Sanyal, COO, Consumer Voice said that Tobacco consumption has reached a dangerous level for consumers which needs immediate attention by the law makers since it is making consumers poorer and leaving their entire family vulnerable to cancers of the mouth, lung, larynx, to name just a few tobacco related illnesses. He added that it is a proven simple economics that demand falls with a rise in price. Hence we need to raise taxes on tobacco, especially on bidis to a higher level, to discourage its consumption and saving millions of lives.

With the total tax burden currently at 53%, 19.5% and 56% for cigarettes, bidis and smokeless, tobacco respectively, taxation in India is much lower than the level recommended by the WHO, according to which the tax burden should represent at least 75% of the retail price. The union budget 2017-18 also did not address this anomaly with an effective tax increase of 6%, lower than atleast the 10% increase witnessed in previous budgets.

Surender Verma, Chairman, Citizen awareness Group, Punjab said that Taxation is clearly the best way to tackle the tobacco threat as reiterated by research all over the world including in India.  We hope that the GST Council will ensure a significant increase in tobacco taxation and decrease in the affordability of tobacco products while finalizing the GST reform.

With 10 lakh tobacco triggered deaths every year, public health advocates believe that the government’s taxation policies in the tobacco sector have left public health concerns unaddressed. Taxation is clearly the best way to tackle the tobacco threat as reiterated by research all over the world including in India. It is critical that the total tax burden on tobacco under the GST regime does not fall below the current tax burden in order to achieve revenue neutrality and maintain the current progress on public health.