Duty on tobacco products up 10-15%

Duty on tobacco products up 10-15%

The government has announced a 10-15% hike on the excise duty on several tobacco products, but kept bidi out of the tax net, much to the chagrin of health activists who blame bidi for almost six lakh deaths each year.

“To discourage consumption of tobacco and tobacco products, I propose to increase the excise duties on various tobacco products other than bidi by about 10-15%,” Finance Minister Arun Jaitley said in his Budget speech on Monday.

The government provided a list on the enhancement of additional excise duties on cigarettes of various lengths, cigars, cheroots, cigarillos, gutkha, chewing tobacco, khaini, zarda, unmanufactured tobacco and paper rolled bidis. Health activists said bidis are India’s most common tobacco product accounting for almost 64% of tobacco consumption, largely by the poor even though new studies show a shift in the smoking trends both in rural and urban areas.

“It is sad that government continues to subsidise bidi that is responsible for nearly six lakh deaths every year,” said Pankaj Chaturvedi from Tata Memorial Hospital, Mumbai.

Bidis do not get adequate attention from a fiscal collection point of view and are kept out of the tax net with policy makers claiming that increasing taxes on bidis will affect the livelihood of millions who depend on the trade.

“The continuing discriminatory treatment of cigarettes is a matter of deep concern particularly due to the fact that bidis, which are the most popularly consumed smoking tobacco product in India, especially in rural areas, have once again been spared with no increase in tax after 2012-13,” says a statement from the Tobacco Institute of India.

The additional excise duty on cigarettes is being increased on non-filter and filter cigarettes of various lengths so that the aggregate of duties of excise on such cigarettes increases by about 10-15%. “But since there is no increase on the basic excise duty, it would not make much difference in tobacco prices,” said Monika Arora from the Public Health Foundation of India.

Others also feel that the tax hike on cigarettes was not high enough. “While pegging the GDP growth at 7-7.75% in its Economic Survey, effecting a mere tax increase of 10% on cigarettes is tantamount to making tobacco products more affordable,” pointed out Rijo John, economist at the Indian Institute of Technology, Jodhpur. 

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