Tax burden on cigarettes in India far beneath worldwide requirements: Examine: The Tribune India

New Delhi, December 16

The current tax rate on cigarettes in India is well below the standard of international best practices. A new study on Wednesday showed that Australia and New Zealand were named as top performers for significantly reducing the affordability of cigarettes.

In the first edition of the International Cigarette Tax Scorecard compiled by Tobacconomics, India received an overall score of 1.88 out of a possible 5, which is slightly better than the Southeast Asian average (1.82) but lower than the global average (1.82) 2.07) and scores of the top performing countries (4.63).

“The top performing countries are Australia and New Zealand, reflecting their high, uniform specific excise taxes on cigarettes, with regular increases having significantly reduced the affordability of cigarettes,” Tobacconomics said after evaluating the performance of cigarette tax policy in over 170 countries, including India.

Tobacconomics, based at the University of Illinois at the Chicago Institute for Health Research and Policy, conducts economic research to inform and shape tax policy for health worldwide.

The scorecard assessed countries’ cigarette tax policies based on international best practices using data from the World Health Organization from 2014 to 2018.

Almost half of the countries scored less than two out of five.

There was little improvement from 2014 to 2018 – the global average rose only slightly from 1.85 in 2014 to 2.07 in 2018.

Turning to India, the country said it had significantly improved its cigarette taxation policy score from 1.38 in 2014 to 2.38 in 2016. After that, due to a lack of tax increases on tobacco and the increasing affordability of cigarettes, it fell to 1.88 in 2018.

However, the overall score improved in 89 countries. The introduction of substantial excise duties on cigarettes, the simplification of the previously complicated tiered structure of excise duties on cigarettes, and large tax increases are the reasons some countries have improved their scores and are already benefiting from higher revenues and lives saved.

“The scorecard shows significant untapped potential for cigarette tax increases to increase revenues for a COVID-19 recovery, most importantly preventing premature deaths and promoting a healthy and productive workforce,” said Frank J Chaloupka, director of tobacco and lead author the scorecard.

“The current tax rate on cigarettes in India is 52 percent, well below the standard of international best practice. The failure to increase taxes on tobacco products after the GST was introduced in 2017 has made cigarettes more affordable in India,” said Dr. Rijo John, health economist and associate professor at the Rajagiri College of Social Sciences in Kochi.

Dr. John suggested that India need to reduce the number of tiers for the purpose of cigarette taxation and significantly increase its existing excise taxes on tobacco products to save lives and generate much-needed revenue.

“Indian and global studies provide clear evidence that tobacco use in all forms, whether smoking or chewing, leads to severe COVID-19 manifestations and adverse outcomes,” said Dr. Harit Chaturvedi, Chairman of the Max Institute of Cancer Care.

Regular tax increases on tobacco products will reduce their consumption and generate much-needed revenue to bolster health promotion and prevention programs, and they will also help combat tobacco comorbidities and the COVID-19 pandemic in India, said Dr . Chaturvedi.

It is estimated that around 3,500 people die as a result of tobacco use in India every day, and the economic burden from tobacco use was 1.77.341 billion rupees in 2017-18, representing 1 percent of the country’s GDP.

With the COVID-19 pandemic severely impacting Indian GDP growth, tobacco tax reform offers India a quick and easy way to generate the much-needed revenue for economic recovery, experts say.

“Tobacco taxes are the most effective way to minimize the negative health and economic effects of tobacco use. The best way to do this is with a single, specific excise tax that is at least 75 percent of the retail price and is automatically updated to keep up with inflation and ahead of income growth, “said Tobacconomics. PTI