Health Ministry suggests to tax tobacco products heavily under new GST law

Tobacco is the cheapest unregulated poison currently available in the market, says Docotor Pankaj Chaturvedi. Approximately 48 % of men and 20 % of women consume tobacco (35 % of the overall adult population)-of these at least 10 lakh are dying each year from tobacco related diseases. Bidis comprise 48 % of the tobacco market, chewing tobacco 38% and cigarettes 14% so it is evident that bidis account for a significant portion of deaths

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In an effort to discourage people from consuming tobacco, the Union Health Ministry has sought to tax all such products, including bidis, at 28% as well as impose higher cess under the new GST regime.

The Health ministry has suggested to the Finance ministry that the cess levied under the GST should be kept high to make tobacco products unaffordable.

Dr Pankaj Chaturvedi, Oncologist at Tata Memorial Hospital, Mumbai, and a crusader fighting for tobacco free india  said, “It is a welcome move. I hope the Finance ministry takes the suggestion given by the Health ministry. Many letters have been written in the past to the GST council on the same. I see no logic in giving tax subsidy to a product that carries a warning saying that using it kills.”

He said tobacco products are the cheapest unregulated poison currently available in the market. “With current tax pattern, consumer and the nation are losers, whereas handful of business families (bidi and chewing tobacco industry owners) are making obscene profits by selling this weapon of mass destruction,” said Chaturvedi.

Health Ministry suggests to tax tobacco products heavily under new GST law

Approximately 48 % of men and 20 % of women consume tobacco (35 % of the overall adult population) – of these at least 10 lakh are dying each year from tobacco related diseases. Bidis comprise 48 % of the tobacco market, chewing tobacco 38% and cigarettes 14% so it is evident that bidis account for a significant portion of those deaths.

“At least a 10% increase in the effective excise on tobacco product has almost been a norm in the past several years and a mere 6% increase was a boon for the tobacco industry and a major setback for the public health interests of our country. We hope that the honourable Finance Minister Arun Jaitley will ensure a significant increase in tobacco taxation and decrease in the affordability of tobacco products while finalizing the GST reform,” said Ashima Sarin, Director of the Voice of Tobacco Victims (VOTV).

With the total tax burden currently at 53%, 19.5% and 56% respectively for cigarettes, bidis and smokeless tobacco taxation in India is much lower than the level recommended by the World Health Organization (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 at least the 10% increase witnessed in previous budgets.