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Budget 2016:Health Ministry asks for Excessive Taxation on Tobacco Products


Budget 2016:Health Ministry asks for Excessive Taxation on Tobacco Products
In an attempt to make tobacco products out of reach for  the common man, it has proposed heavy taxation on all tobacco related products. The current tax structure on these products have not helped in dissuading the consumer from keeping away from it.
According to India Today,the WHO study which forms the basis of the stance taken by the ministry clearly indicates that the current Excise and Value Added Tax (VAT) rates are not sufficient to make tobacco products unaffordable.
“The study recommended that not only the tax on all types of tobacco products should be increased substantially but the tobacco tax regime should also be broadened to include manufacturing of tobacco products by the informal sector under the tax net,” stated a letter written by BP Sharma, secretary, Union Health Ministry.
According to the Health Ministry the increasing  tobacco taxes, with a view on increasing inflation adjusted prices of tobacco  is particularly important for protecting young people from getting initiated and continuing with  tobacco consumption.
“The recommendations of this study would help your department in making a strong case for increasing excise duty on all tobacco products. These initiatives will go a long way in discouraging tobacco use and protecting the youth and other vulnerable populations in the country from getting addicted to tobacco, thereby improving health of the citizens as well as reducing public health costs,” said the health ministry letter.
Revenue earned from cigarettes has risen from  Rs 14,853.73 crore in 2012-13 to Rs 16,675.77 crore 2014-15. Cigarettes are taxed at a very low rate in India.
According to the WHO recommendation, countries need to impose 70 percent or more excise tax on the retail price of tobacco products   to succeed in the two fold  objective of reducing the use of tobacco and simultaneously increase Government’s revenue.
In 2014, the average tax incidence for manufactured cigarettes was only 53 per cent of the final retail price which was only marginally increased in the 2015-2016 budget.
 In comparison to other middle income countries with effective tobacco tax systems, India ‘s cigarette excise tax is very low. India is the second largest consumer and third largest producer of tobacco products.
The  Global Adult Tobacco Survey India 2010 states that  35 per cent of the population in the age group of 15 years and above, consume tobacco in some form or other.

Non Communicable Diseases (NCD) are the leading cause of death, globally as well in India, accounting for around 5.2 million deaths in India alone. 80 per cent  and more of all NCD related deaths are related to  four clusters of diseases: Cardiovascular diseases, cancers, chronic respiratory diseases and diabetes with consumption of  tobacco  being the common risk factor for  them all.

Tobacco users number  in India currently stands at 27.5 million.



Source: Inputs from India Today
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