GST: Health groups seek higher taxes for tobacco

Ahead of a crucial GST council meeting on February 18, public health groups had urged the finance minister to place all tobacco products especially bidis, in the demerit goods category.

tobacco

“All tobacco products including bidis should be taxed at uniformly high rates under the new indirect tax framework, expected to kick in from July 1,” they said in a statement. With 10 lakh tobacco triggered deaths every year, public health advocates believe the government’s taxation policies have left these concerns largely unaddressed.

According to WHO, tax burden should represent at least 75% of the retail price. Further, Union Budget 2017-18 also did not address this anomaly, and effective tax increased by only 6%, lower than the 10% increase witnessed in previous Budgets. The excise increase, proposed on tobacco products in the Budget, fell short of even previous Budgets, since the increase in additional duties of excise and basic excise duties on various tobacco products amounted to an increase of only 6%, says a statement.

Dr Pankaj Chaturvedi, oncologist at Mumbai-based Tata Memorial Hospital, said,”I see no logic in giving tax subsidy to a product that carries a product warning that it kills. In fact, it is the cheapest and unregulated poison currently available in the market”.

Like earlier years, the Budget also failed to increase the excise taxes on tendu rolled handmade bidis, which is consumed by almost 98% of bidi smokers, instead increasing it on paper-rolled bidis, which have a negligible market share.

Classifying different tobacco products in lower rate GST slabs will be a distortion, and will send a wrong message and promote use of products like bidis.

Bidis are the most commonly used tobacco product in India, accounting for 64% of all tobacco consumption and are disproportionately consumed by the poor. India has the second largest number of tobacco users (275 million or 35% of all adults in India) in the world — of these at least 10 lakh die every year from tobacco related diseases. The total direct and indirect cost of diseases attributable to tobacco use was a staggering Rs 1.04 lakh crore ($17 billion) in 2011, or 1.16% of India’s GDP, it adds.

According to Dr Rijo John, assistant professor IIT-Jodhpur, “Unless corrective measures are taken in the impending GST by bringing all tobacco products under the highest demerit rate of 28% plus the highest possible cess, it would be a severe blow to public health in India.”

Taxation is clearly the best way to tackle the tobacco threat as reiterated by research all over the world, including India.

Source : http://timesofindia.indiatimes.com/business/india-business/gst-health-groups-seek-higher-taxes-for-tobacco/articleshow/57260843.cms

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