'Tax hike on cigarettes need to be indexed'

'Tax hike on cigarettes need to be indexed'

Ahead of the Budget, the Health Ministry has suggested that a tax hike on tobacco products needs to be indexed with inflation for lowering their affordability so that these harmful products remain out of reach for a large section of people. The NDA government enhanced taxes on tobacco in the last two Budgets, but it did not seem to make much of a difference to the consumer due to corresponding increase in the per capita income, the reason behind the ministry’s demand to link the tobacco tax with inflation.

The World Health Organisation (WHO) is in dialogue with the Finance Ministry to better understand the tobacco economics in the Indian context and suggest to the government on how the tax structure needs to be modified for the betterment of public health.

India is a signatory to a global tobacco control treaty piloted by the WHO that recommends high taxation as one of the key measures to reduce consumption of tobacco in all forms. “Despite the taxation, there is a huge gap (from ideal taxation) on cigarette, and bidi and oral tobacco are virtually out of the tax net.,” said K Srinath Reddy. 

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