Doctors, economists, and public health organizations have urged the government to raise the excise duty on all tobacco products in the Union Budget 2024–25 in order to raise additional funds. It is believed that raising the excise tax is one of the most cost-effective public policy tools available to regulate tobacco consumption.
In addition, they also requested an increase in health taxes on cigarettes, bidis, and smokeless tobacco in their appeals to the Finance Ministry. Health taxes, also known as sin taxes, are excise taxes imposed on products such as tobacco that have a clear negative public health impact.
A recent study revealed that cigarettes, bidis, and smokeless tobacco have become increasingly affordable over the past 10 years, PTI reported.
Dr. Rijo John, health economist and adjunct professor at Rajagiri College of Social Sciences, Kochi said there has been a minor increase in National Calamity Contingent Duties (NCCD) on cigarettes, but apart from that, there has not been any major rise in tobacco taxes since the introduction of GST in July 2017.
“Adding the current GST rate, compensation cess, NCCD, and Central Excise, the total tax burden (taxes as a percentage of final tax inclusive retail price) is only about 49.3 percent for cigarettes, 22 percent for bidis and 63 percent for smokeless tobacco,” he said.
Given that more than six years have passed since the implementation of the GST, and there has been no substantial tax hike on tobacco products during this period, Dr. John said it is crucial for the Union government to consider increasing taxes on tobacco beyond minor increments in NCCD, which make up less than 10 percent of the overall taxes imposed on tobacco.
“When the government refrains from raising taxes on tobacco, the tobacco companies independently elevate prices, thereby boosting their profits. Consequently, the augmented revenue that the government could have collected is redirected toward industry profits,” he said as quoted by PTI.
On the other hand, Dr. Pankaj Chaturvedi, Head Neck Cancer Surgeon at Tata Memorial Hospital stated that nearly 50% of all cancers in India are due to tobacco.
He believes that it is in the interest of the users as well as of the country to increase taxes on all tobacco products as this will reduce their affordability and consumption.
The Parliament Standing Committee on Health recently submitted a pertinent and comprehensive report on Cancer Care Plans and Management in which it undertook a detailed study of the causes of Cancer in India and noted with concern that in India, “the highest number of lives lost is due to oral cancer caused by tobacco, followed by cancer of the lungs, esophagus, and stomach.”
India has the second largest number (268 million) of tobacco users in the world and of these 13 lakhs die every year from tobacco-related diseases, experts said. Nearly 27 percent of all cancers in India are due to tobacco.
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