The paper states that big cigarette players like ITC, lobby with the government asking to reduce taxes arguing that excessive taxes promote illegal cigarette trade.
As low as 2.7% of all cigarettes sold in India are illicit, says a scientific research paper, contrary to tobacco industry claims of illicit cigarettes in India being as high as commanding a 20 per cent market share.
A research study published in British Medical Journal, where researchers collected 11, 063 empty cigarette packs from 1,727 retailers across four metro cities - New Delhi, Mumbai, Kolkata and Chennai, and smaller towns like Aizawl, Bilaspur, Kohima and Shillong — pointed this out.
The highest prevalence of illicit packs in town of Aizawl near the Bangladesh and Myanmar border, over 35 per cent. Illicit cigarette packs are those that have no duty free sign, no graphic health warnings, no textual health warnings and no mention of 'price inclusive of all taxes.'
There is greater incentive to evade taxes on cigarettes as they constitute around 52 per cent of the total retail price, than bidis, taxes on which constitute 18 per cent of the retail price.
The paper states that big cigarette players like ITC, lobby with the government asking to reduce taxes arguing that excessive taxes promote illegal cigarette trade.
"This is grossly untrue, as the study reveals that illicit cigarettes form a very small share of the over all cigarette market," said Dr Pankaj Chaturvedi, oncosurgeon at Tata Memorial Hospital in Mumbai.
"A mere 2.7 per cent rate of tax evasion is tiny compared with income tax and sales tax evasion in India, which are at a much larger level. Such a small scale of tax evasion should not prevent the government from increasing tobacco excise taxes, which would certainly lead to better public health and higher tax revenue,"argues the paper.
Despite the general perception that smaller roadside pan/tea shops facilitate illicit cigarette sales, we found that the majority of illicit cigarette packs were distributed via permanent retail stores.
The surveyors walked along a kilometer of the busy street and handed over an empty bag with a unique ID to each retailer they encountered. The shop keeper was asked to deposit all empty cigarette packs emptied throughout the day as a result of loose cigarette sale and was given a small monetary award for complying.
The illicit cigarettes came from Myanmar, Indonesia, Korea, England, France, Nepal and Switzerland.
What is illicit?
- llicit cigarette packs are those that have no duty free sign, no graphic health warnings, no textual health warnings and no mention of ‘price inclusive of all taxes’.
- The highest prevalence of illicit packs is in the town of Aizawl near the Bangladesh and Myanmar border, over 35 per cent.
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