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HindustanTimes Thu,28 Aug 2014

Harsh Vardhan wants 50% VAT on tobacco products

PTI  New Delhi, July 06, 2014
First Published: 14:22 IST(6/7/2014) | Last Updated: 15:22 IST(9/7/2014)
In his bid to discourage smoking among youths, Union health minister Harsh Vardhan has urged states and Union Territories to impose VAT of at least 50% on all tobacco products to "make them less affordable".
 
Vardhan's communique to states comes soon after his request to finance minister Arun Jaitley to effect a hike in prices of tobacco products in this year's budget.
 
These steps will go a long way in discouraging tobacco use among the youth, Vardhan has reportedly said.
 
Citing a recent report which put the total economic cost attributable to all diseases caused by tobacco consumption at Rs. 1.04 lakh crore, Vardhan stressed the need to discourage tobacco consumption for "reducing avoidable public expenditure".
 
In his letter to chief ministers, Vardhan has used the example of Rajasthan where VAT (value-added tax) on tobacco products stands at 60 per cent.
 
Quoting a report, Vardhan said 80% of deaths caused by non-communicable diseases are due to cardio-vascular diseases, cancer, chronic respiratory problems and diabetes, for which tobacco consumption is a major reason.
 
Vardhan had a few days ago written to finance minister Arun Jaitley, advocating for hike in prices of tobacco products.
 
In a letter written to Jaitley, Vardhan had said the number of male smokers in the country has increased to 105 million from 83 million in the past one decade, and argued that their ill-effects on health force over 15 million people into poverty every year.
 
In the letter, he has proposed "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."

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