Apply higher tax on tobacco products under GST:Experts
Ahead of a crucial meeting of the GST Council on February 18 that will discuss the categorization of tobacco products, experts under the Tobacco Free Kerala umbrella have appealed to the Union Finance Minister to include all tobacco products including beedis in the demerit goods category.business Updated: Feb 16, 2017 14:25 IST
Ahead of a crucial meeting of the GST Council on February 18 that will discuss the categorization of tobacco products, experts under the Tobacco Free Kerala umbrella have appealed to the Union Finance Minister to include all tobacco products including beedis in the demerit goods category.
In a letter to the Finance Minister, the state-based outfit has pointed out that classifying different products in lower rate slabs will lead to distortion and prompt users to switch to lower priced products including beedis, damaging their health in the process.
Expressing disappointment over the proposed duties of only 6% on tobacco products in the Union Budget 2017, Dr Paul Sebastian, Chairman, Tobacco Free Kerala, said, “increasing the prices of tobacco products high enough to dissuade use is the need of the hour in the wake of reiterated evidence on the relation between tobacco use and cancer in the country.”
“All tobacco products should be taxed at equal rates to prevent switching over from a higher priced product to a low priced one,” Sebastian, also the Director of Regional Cancer Centre here, said in the letter.
According to Dr Rijo John, Assistant Professor, IIT Jodhpur, “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 per cent and the highest possible cess, it would be a severe blow to public health in India, he said.
In the Union Budget 2017-18, additional duties of excise and basic excise duties on various tobacco products amounted to an increase of only 6% in total excise on almost all tobacco products, the letter said.
In the case of beedis, the total increase in excise tax of paper-rolled hand-made beedis was 25%. However, paper-rolled beedis constitute only miniscule portion of the beedi market, as the majority 98% of all beedis consumed in India are tendu rolled/hand-made, it said.
According to the latest Global Adult Tobacco Survey, beedis are the most commonly used tobacco products in India, accounting for 64% of all tobacco consumption and are disproportionately consumed by the poor.
While beedis are considered a poor man’s pleasure, the reality is that beedis are the bane of India’s poor and not taxing them heavily to reduce consumption is extremely anti-poor, the letter points out.
The World Health Organisation has said that taxation is clearly the best way to tackle the tobacco epidemic. It recommends that tax share should represent at least 75% of retail prices of tobacco products, it added.