Public Health Groups Urge Union Finance Minister to tax ALL tobacco products including bidis at 28% under the GST Regime

Jaipur, Ahead of a crucial GST Council meeting on February 18, several leading public health groups have reached out to the Union Finance Minister Arun Jaitley and his key advisers, urging them to ensure that ALL tobacco products especially bidis, are placed in the demerit good category at the 28% GST rate with an additional levy of the highest possible rate of cess. These groups have also strongly recommended that tobacco products including bidis should be taxed at uniformly high rates under the new indirect tax framework expected to kick in from July 1.
यह भी पढ़िए :प्रभारी मंत्री की मौजूदगी में करौली विधायक ने सांसद पर लगाए रिश्वत खोर के आरोप
The move is significant as it comes just days ahead of the GST council meet which is expected to discuss the rate slabs for different goods and services under the GST mechanism.
With the total tax burden currently at 53%, 19.5% and 56% respectively for cigarettes, bidis and smokeless, tobacco taxation in India is much lower than the level recommended by the WHO, according to which the tax burden should represent at least 75% of the retail price. The union budget 2017-18 also did not address this anomaly with an effective tax increase of 6%, lower than atleast the 10% increase witnessed in previous budgets.
With 10 lakh tobacco triggered deaths every year, public health advocates believe that the government’s taxation policies in the tobacco sector have left public health concerns unaddressed.
Classifying different tobacco products in lower rate GST slabs will be a distortion and will send a wrong message and promote the 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.  Bidis contribute to the majority of the 10 lakh deaths attributable to tobacco as well as the staggering economic burden caused by tobacco use.
The excise increase proposed on tobacco products in the recent Union Budget of 2017-18 fell far short of even previous budgets, since the proposed increase in Additional Duties of Excise and Basic Excise duties (BED) on various tobacco products amounted to an increase of only 6% in the current budget.  Most importantly like earlier years, the budget also failed to increase the excise taxes on tendu rolled hand-made bidis which almost 98% of the bidis smokers consume instead increasing it on paper-rolled bidis which has a negligible market share – once again keeping bidis a very affordable and practically unregulated poison for its 67.5 million bidi users.
According to Dr. Rijo John, Assistant Professor, IIT Jodhpur, “The tobacco industry knows how to exploits its consumers and this is why it increases prices much more than the tax increases that the government proposes every year. It is unfortunate that the government doesn’t take a cue from this and increase taxes on tobacco products substantially. As against a normally expected 10%-15% increase in taxes on tobacco products, a mere increase of 6% announced in the budget is a boon to the tobacco industry. Unless corrective measures are taken in the impending GST by bringing all tobacco products under the highest demerit rate of 28% + the highest possible cess, it would be a severe blow to the public health in India.”
Taxation is clearly the best way to tackle the tobacco threat as reiterated by research all over the world including in India. It is critical that the total tax burden on tobacco under the GST regime, does not fall below the current tax burden in order to achieve revenue neutrality and maintain the current progress on public health.
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 Rupees 1.04 lakh crore ($17 billion) in 2011 or 1.16% of India’s GDP. 
Dr. Pankaj Chaturvedi, Oncologist, Tata Memorial Hospital, Mumbai 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. With current tax pattern, consumer and the nation are losers, whereas handful of business families (bidi and chewing tobacco industry owners) are making vulgar profits by selling this weapon of mass destruction.
Approximately 48 percent of men and 20 percent of women consume tobacco (35 percent of the adult population overall) - of these at least 10 lakh are dying each year from tobacco related diseases. Bidis comprise 48 percent of the tobacco market, chewing tobacco 38 percent and cigarettes 14 percent so it is evident that bidis account for a significant portion of those deaths.
According to, Dr. Pawan Singhal, patron of the Voice of Tobacco Victims (VOTV) and Associate Professor of Sawai Man Singh Hospital, “At least a 10% increase in the effective excise on tobacco product has almost been a norm in the past several years and a mere 6% increase was a boon for the tobacco industry and a major setback for the public health interests of our country. We hope that the honorable Finance Minister will ensure a significant increase in tobacco taxation and decrease in the affordability of tobacco products while finalizing the GST reform”
“Tobacco consumption has reached a dangerous level for consumers which needs immediate attention by the law makers since it is making consumers poorer and leaving their entire family vulnerable to cancers of the mouth, lung, larynx, to name just a few tobacco related illnesses”"It is a proven simple economics that demand falls with a rise in price. Hence we need to raise taxes on tobacco, especially on bidis to a higher level, to discourage its consumption and saving millions of lives.”

India cannot move forward on its poverty alleviation and development agenda without addressing the health concerns and untimely death of 67.5 million bidi users.  It is critical that the proposed GST structure and rate treats bidis at par with all other tobacco products.  Categorizing bidis in the demerit goods category may be one of the most critical public health and revenue decisions that honorable Finance Minister can take, which will impact the health and well-being of Indians.
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