Vardhan wants steep hike in tax on cigarettes

Terming the health and social costs of tobacco use "intolerable", Health Minister Harsh Vardhan has written to Finance Minister Arun Jaitley asking him to impose a steep uniform hike of Rs 3.5 per cigarette so as to make their cost prohibitive and discourage consumption.

He has also sought doing away with tax exemption given to bidi industry to discourage their use.

In a letter written yesterday to Jaitley ahead of the general budget next month, Vardhan said the number of male smokers in the country has increased to 105 million from 83 million in the last decade and argued their ill-effects on health force over 15 million people into poverty every year.

"I propose... a large but feasible tax hike in the 2014 budget on cigarettes of Rs 3.5 per stick. The tax would be applied to all lengths to prevent the industry (tobacco) from shifting production and marketing to lower length cigarettes, as has been the past practice," he said in the letter.

"The more expensive they become, the better it is for all of us. Their price should be hiked. They should become rare," Vardhan told reporters today.

If his proposals are implemented, Vardhan told Jaitley, they would lead to over three million smokers quitting and three million potential smokers not starting at all. The new tax would also bring about Rs 3800 crore in revenue.

While the hike in cigarette price would be borne mostly by the upper income class the reduction in mortality would benefit the low-income population, he said.

He has also sought regulation of bidi industry on an urgent basis, saying it has enjoyed several exemptions which have caused it to grow even as the condition of bidi roller has deteriorated further.

"Let me add that higher tobacco tax incurs no or only minimal economic harm, including no net loss of jobs and minimal harm to current bidi workers," he told Jaitley.

The Finance Minister's "modest" action, he said, would save millions of lives and would be one of the most important actions the government can take to "secure better health and reduce poverty".