Goa may hike VAT on tobacco products from 22% to 66% in state budget

Goa government may increase the Value Added Tax (VAT) on tobacco products by a big percentage in the upcoming state budget, a senior official said on Wednesday. The Excise Duty on tobacco products, except bidis, has already been increased by 10-15% in the Union Budget.

"There is a suggestion from National Organisation for Tobacco Eradication (NOTE) that VAT on these products should be increased from the existing 22% to a whopping 60%," a senior official, who is part of Goa government's team to prepare the forthcoming budget, told PTI.

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The state budget would be presented on March 16, during the Goa Assembly session which begins on March 14. The official said that Chief Minister Laxmikant Parsekar recently met NOTE officials. If such an increase is introduced, the cost of tobacco products would be doubled in the state, he said.

NOTE national convener Dr Shekhar Salkar said the increase in prices of tobacco products should be more than the rise in cost of food items. "We have seen that the taxation on food products is more than tobacco. So it becomes cheaper for anyone to smoke," Salkar said while confirming that NOTE has demanded VAT to be increased to 60% in the upcoming state budget.

He said taxation on tobacco products is not to collect revenue, but to discourage people from smoking. "Government's intention should be to improve health of the people," he said. The increase in VAT should be across the board, unlike that in the Union Budget which has proposed to keep bidis out of the ambit of hike in taxation, he added.