18 February, 2016

Did you know tobacco products are cheaper than essential food items?

Tobacco products were cheaper than essential food items in India, says a new study. ‘The current excise and Value Added Tax (VAT) rates are insufficient to increase the prices of tobacco products, therefore making these products easily affordable,’ said the study conducted by the Institute for Studies in Industrial Development (ISID) and Public Health Foundation of India (PHFI). Highlighting that tobacco taxation as a fiscal policy was an advantage for both public health as well as revenue generation, Henk Bekedam, WHO representative to India, said: ‘A comprehensive tax policy leads to reduction in tobacco use especially among young people and at the same time provides increased revenues to the government. ‘It has also been seen that affordability, in relation to income, of tobacco products is increasing at the national level, except for recent years,’ he said, adding that this was true even for the poorest households in the country. The tax burden on tobacco products was not in line with the WHO Framework Convention on Tobacco Control (WHO FCTC) recommendations, which says excise taxes should account for at least 70 percent of retail prices of tobacco products.  

In recent times, the share of tax burden has also declined — for cigarettes it declined from 55.3 percent in 2008 to 36.8 percent in 2013, and for bidis, it declined from 7.2 percent in 2011 to 5.3 percent in 2013. The study corroborates the recent WHO Report on the Global Tobacco Epidemic, 2015, which indicated that cigarettes have become more affordable in India during 2008-14. According to Article 6 of WHO FCTC to which India is a party, the prices of tobacco products must be increased periodically to make them inflation-adjusted and there should be a uniform increase in tax rates across products. ‘Tobacco taxation policy is the most cost effective strategy for tobacco control and has the ability to affect consumption, prevalence and affordability. Higher prices of tobacco products can promote cessation and prevent initiation among young people,’ said PHFI president K. Srinath Reddy.

The study recommended that tax on all types of tobacco products should be increased substantially and further the tobacco tax regime should be broadened to include the unorganised manufacturing sector under the tax net. It also recommended that the tax exemptions on production of less than two million bidis should be eliminated and tax slabs on cigarettes based on length should be eliminated in a phased manner. These findings come on the heels of another health ministry report, which estimated that the total economic cost attributable to tobacco use from all diseases in 2011 amounted to a staggering Rs.1,04,500 crore ($22.4 billion) in India, equivalent to 1.04 percent of India’s GDP.  

Source: www.dnaindia.com

18.02.2016

Change what you can change and acknowledge and accept what you can’t

Rod Williams