Team Blitz India
NEW DELHI: Public health groups, along with doctors and economists, have urged the Government to increase excise duty on all tobacco products in Union Budget 2024-25 to generate additional revenue. In their appeal to the Finance Ministry, they have asked for an increase in health tax, also known as sin tax, on cigarettes, bidis, and smokeless tobacco.
The appeal comes in the backdrop of a recent report of the Parliamentary Standing Committee on Health which shows that India has, ‘the highest number of lives lost due to oral cancer caused by tobacco, followed by cancer of the lungs, oesophagus and stomach.’ The Committee also highlights that India has one of the lowest prices of tobacco products in the world and that there is a need to increase taxes on them.
According to experts, among the several public policy tools to regulate the consumption of tobacco, increasing excise tax is one of the most costeffective. It is used by many countries to keep consumption under check.
According to a recent study, cigarettes, bidis, and smokeless tobacco have become increasingly affordable over the past 10 years.
Recently, there has been a minor increase in National Calamity Contingent Duties (NCCD) on cigarettes, but apart from that, there has not been any major increase in tobacco taxes since the introduction of GST in July 2017.
Even while the Government refrains from raising taxes, tobacco companies increase prices, thereby boosting their own profits.
Adding the current GST rate, compensation cess, NCCD, and central excise, the total tax burden (taxes as a percentage of final tax including retail price) is only about 49.3 per cent for cigarettes, 22 per cent for bidis and 63 per cent for smokeless tobacco.
WHO recommends a tax burden of at least 75 per cent of retail price for all tobacco products. The existing tax burden on all tobacco products is far lower than this.
Tobacco use claims 13 lakh lives every year. Nearly 50 per cent of all cancers in India are due to tobacco. India has the second highest number of tobacco users in the world at 268 million.
