Public health groups, along with economists and doctors, have urged the government to increase excise taxes on all tobacco products in the Union budget from 2022-23 to generate additional revenue. In their appeals to the Ministry of Finance, they call for an increase in the excise duty on cigarettes.
In her view, increasing excise duties on all tobacco products can be a very effective policy measure in addressing the immediate need to increase central government revenues. It will be a profitable proposition to generate income and reduce tobacco use and related illnesses, as well as COVID-related comorbidities, they added.
The tobacco tax revenue could add significantly to the increased demand for resources during the pandemic, including vaccinations and improving health infrastructure, said Bhavna Mukhopadhyay, chief executive, Voluntary Health Association of India, in a statement.
âAn increase in excise taxes on all tobacco products will generate significant revenue for the central government and make tobacco products less affordable, especially for young people.
This will provide a solid foundation for reducing tobacco use among vulnerable populations and will have a lasting impact on the lives of the country’s 268 million tobacco users and discourage children and adolescents from starting tobacco, “Mukhopadhyay said.
The Treasury Department, in its answer to a question at the current winter session of Parliament, stated that the Central Excise Tax (NCCD) on tobacco products was Rs.1,234 billion in 2018-19, Rs 1,610 crore in 2019-20 and Rs 1,610 crore in 2020- 21 it was 4,962 crores Rs.
The taxes levied on tobacco, much like taxes from other sources, collectively form part of the Government of India‘s total gross tax receipts (GTR) and are used to fund all of its plans and programs, it said.
The share of central excise taxes in total tobacco taxes has fallen on average from 54% to 8% for cigarettes, 17% to 1% for bidis and 59% to 11% for smokeless tobacco products. from 2017 (before GST) to 2021 (after GST), said Rijo John, health economist and associate professor at Rajagiri College of Social Sciences, said Kochi.
Several countries in the world have high excise taxes in addition to the GST or sales tax and are constantly being revised. Nonetheless, the consumption tax on tobacco remains extremely low in India, he said.
âThe tobacco industry in India has practically seen an extended tax-free season for tobacco products in the last four years since the introduction of the GST, as the tobacco tax has not increased significantly during this time.
This has made many tobacco products more affordable. It could prove extremely detrimental to public health and potentially reverse some of the tobacco consumption reductions India achieved between 2010 and 2017, “John said.
The Union budget must take public health into account and significantly increase tobacco taxes, especially on Bidis, he said.
The total tax burden (taxes as a percentage of final sales tax including retail price) is only around 52.7 percent for cigarettes, 22 percent for bidis and 63.8 percent for smokeless tobacco. This is much lower than the World Health Organization (WHO) recommended tax burden of at least 75 percent of the retail price of all tobacco products, John said.
According to the WHO, increasing the price of tobacco products through tax increases is the most effective policy for reducing tobacco consumption. Higher tobacco prices reduce affordability, promote smoking among consumers, prevent entry among non-consumers and reduce the amount consumed by persistent users.
âThere is solid evidence that tobacco increases the risk of severe Covid infection and complications. Tobacco users have a higher risk of death after Covid. It is in the interests of consumers as well as the country that increasing taxes on all tobacco products will reduce their affordability and consumption. It will then limit your susceptibility to Covid infection and its complications, “said Pankaj Chaturvedi, Head Neck Cancer Surgeon, Tata Memorial Hospital.
India has the second largest number (268 million) of tobacco users in the world and of these, 13 lakh die from tobacco-related diseases every year. Almost 27 percent of all cancers in India are due to tobacco, Chaturvedi said.