Hyderabad: Tobacco taxation needs a significant overhaul in interest of public health

Hyderabad: An expert in GST and chairman of Indirect Tax Committee of Federation of Telangana Chamber of Commerce, V S Sudheer, has asserted tobacco taxation needs a significant overhaul in the interest of public health in view of increasing tobacco consumption in the country.

He explained the share of Central excise duties in the total tobacco taxes decreased from 54 per cent to 8 per cent on cigarettes, 17 per cent to one per cent on bidis, and 59 per cent to 11 per cent on smokeless tobacco products, on average, from 2017 (pre-GST) to 2021 (post-GST).

"Several countries in the world have high excise taxes. along with GST or sales tax. They are continuously being revised. Yet, the excise duty on tobacco in India continues to remain extremely low", the expert pointed out.

"The absence of tax increase means more profits to the tobacco industry or less cost to the consumer leading to more consumption." Sudhir said that the international literature recognise tax increase as one of the most cost-effective tools to regulate the consumption of tobacco use.

He suggested the government to fix an excise tax of at least Re 1 per stick of bidis while aiming for a significant increase in tax on cigarettes and smokeless tobacco products in the 2022 -2023 budget proposals. The higher taxation will help to achieve a significant reduction in the affordability of tobacco products to reduce tobacco use prevalence and facilitate the country's march towards sustainable development goals.