Health experts laud government’ increase of taxation on Tobacco

New Delhi: Doctors, Economists and Public Health Advocates across India on Thursday lauded the ongoing efforts of the Indian government on tobacco taxation and have urged that such efforts need to be augmented to sustain the momentum to continue to achieve revenue and public health goals.


All of them have welcomed the Finance Minister’s decision to levy excise duty on all tobacco products in the interim budget 2019-20.


The Finance Minister, Nirmala Sitharaman, while presenting the interim Budget 2019/20 in the Parliament, stated that “Tobacco products and crude attract National Calamity and Contingent duty.


In certain cases this levy has been contested on the ground that there is no basic excise duty on these items.


To address this issue, a nominal basic excise duty is being imposed,” she had said in the parliament.

Excise duty of Rs.5 per 1000 stick was levied on all tiers of cigarettes.


“On cigarettes above 75 mm, the excise duty will be Rs.10 per 1000 sticks. On man-made bidis, it will be 5 paisa per 1000 sticks and on machine made bidis, it will be 10 paisa per 1, 000 sticks. For most smokeless the rate will be 0.5% rate, she had said.


On Thursday the Public health organisations, doctors and economists applauded the Finance Minister for bringing back excise duty on cigarettes, bidis and smokeless tobacco.


“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 long-lasting impact on the lives of the country,” said Bhavna B Mukhopadhyay, Chief Executive, Voluntary Health Association of India.


She said even though the tax being a nominal increase, it sends a right message that the Government is serious about reducing tobacco consumption by making them less affordable.


WHO recommends that total tax burden on all tobacco products should be about 75 per cent of the retail price.


The present GST rates combined with the compensation cess for all tobacco products is far below the recommended level of tax burden (taxes as a percentage of final tax inclusive of retail price) of 75% by the WHO .


The total tax burden is currently only about 53% for cigarettes, 22% for bidis and 60% for smokeless tobacco – this data reveals a far different picture from what the tobacco industry is portraying in their demand for lower taxes.

The civil society, doctors and economist have been urging the GST council to impose a compensation cess on bidis, similar to that on cigarettes and smokeless tobacco, to make a more rationalized tobacco taxation system.


“The re-introduction of central excise duties on tobacco products in the union budget, although at a very nominal rate, is definitely a welcome development on tobacco taxation under the existing GST regime. This 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,” Dr Rijo John, Economist and Health Policy Analyst said.


Pankaj Chaturvedi, an Oncologist at Tata Memorial Hospital said that the Government should bring uniform taxes on all bidis just like cigarettes and to remove exemptions given to less than 2 million units and hand rolled bidis.


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). Additionally, tens of millions use deadly smokeless tobacco products.


These are harsh realities and there is nothing positive about tobacco consumption.


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

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