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Hike tobacco tax: Union Health Ministry to Finance Minister

Thursday, 26 June 2014 - 6:45am IST | Agency: dna

Taxes on tobacco, bidis and cigarettes are measly and union health minister Dr Harsh Vardhan is making the right noises about the paltry sum. Last week, he wrote to finance minister Arun Jaitley proposing a tax hike.

A bunch of Mumbai-based anti-tobacco activists including Dr Pankaj Chaturvedi, an oncosurgeon from Tata Memorial Hospital in Parel and Dr PC Gupta, director, Healis Sekhsaria Instititute of Public Health had met with Dr Harsh Vardhan and Jaitley last week in New Delhi, after which an intense discussion on hiking taxes on tobacco and related products was discussed.

In a strongly worded letter written by Dr Harsh Vardhan to Jaitley, of which dna has a copy, the health minister points out that the number of male smokers has risen from 83 crore to 10.5 crore over the past ten years and that pushes 1.5 crore persons below the poverty line each year due to health expenditure which ensue from tobacco related diseases.

Dr Harsh Vardhan is of the view that a VAT hike of 45% on cigarettes is no good and that it should further be hiked to 60%. In the letter to Jaitley, he says, "I propose to reform tobacco taxes and implement a large but feasible tax hike in the 2014 budget on cigarettes. If VAT is increased to 60%, it will lead to three million smokers quitting and another three million children not starting."

If taxes are hiked, the price of cigarettes and bidis will escalate. "A cigarette costing Rs9 will rise to Rs14. A pack of 20 that costs close to Rs180 will escalate to Rs280," said Dr Pankaj Chaturvedi.

The letter to the finance ministry to hike taxes comes as an aftermath of study commissioned by the union health ministry and the WHO, which throws up alarming figures of healthcare implications due to tobacco consumption. "Annually, it is estimated that up to Rs7341 crore are spent in treating diseases caused by tobacco use, including heart diseases, respiratory diseases, TB and cancer in Maharashtra alone," states the study.

India loses Rs1,80,000 crore each year on health costs. West Bengal, Maharashtra, Andhra Pradesh and Uttar Pradesh together contribute to 60% of the disease burden caused by tobacco. In Maharashtra, every third adult consumes tobacco, one third of who die prematurely.

Dr Pankaj Chaturvedi said, "The tax on bidi is negligible that contributes to high disease burden and death. As a thumb rule, triple the taxes, double the revenue and halve the consumption. The tax subsidy is only benefitting a few politically powerful families that run the tobacco business. In fact, it is the cheapest 'poison' currently available in the market."

WHO recommends that an increase of tax by 10% can lead to a 5% reduction in consumption of tobacco.Hike tobacco tax: Union Health Ministry to Finance Minister

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