Chennai: India has witnessed decline in tobacco consumption mainly due to the relatively higher taxation.
However, it has been nearly two years since the tax on tobacco has changed under the GST, making tobacco products more affordable. It is high time the GST council raised specific cess on these to sustain the reduction, said health policy analyst and economist, Dr Rijo John.
Public health groups along with doctors and economists urge the members of the GST Council to retain tobacco products as demerit goods at the highest tax rate of 28 per cent plus cess under GST.
“By categorising cigarettes and smokeless tobacco as demerit goods under GST and levying the highest tax, the Government of India has prevented millions of youth from tobacco initiation and life-long addiction. It is critical that these tobacco products are retained in the 28 per cent-plus cess rate category of GST to discourage consumption and encourage millions of tobacco users to quit. Increase in tobacco taxation will be beneficial for our country’s economy as well as to address public health concerns related to tobacco, thus making it a win-win situation,” said Chennai Consumers Association of India chairperson Nirmala Desikan.
Tobacco taxes are particularly effective in reducing tobacco use among vulnerable populations. It is ironical that bidis are not classified under GST even though they are as harmful as cigarettes. Bidis contribute to a majority of the 10 lakh deaths in India every year as well as the staggering economic burden caused by tobacco use and tobacco-related diseases. It is, therefore, requested that bidis, like cigarettes and smokeless tobacco also be classified as demerit goods and taxed at 28 per cent plus cess, said a press release.