Tax hike on bidis, cigarettes could save many lives
POSTED April 12, 2010 - 15:13 | POSTED BY Abby Kapoor
Last edited by Kangna Agarwal on April 12, 2010 - 15:54
The report, ‘Economics of tobacco and tobacco taxation’ in India is released by twin authors, Dr Govinda Rao of the National Institute for Public Finance and Policy and Dr Prabhat Jha of the Centre for Global Health Research, Toronto and has been brought out as part of the Bloomberg Initiative to Reduce Tobacco Use.
The authors analyzed the country’s health gains from taxes on tobacco products, explaining increase in taxes on cigarettes and bidis as “the single most effective intervention to get current smokers to quit”.
Tax increase on bidis and cigarettes
According to the report, if India rises its tax rate on cigarettes from Rs 659 to Rs 3,691 per 1,000 sticks, which amounts to an increase of 78 percent in retail price and on bidis from Rs 14 to Rs 98 per 1,000 sticks, amounting an increase of 40 percent in retail price, 18.9 million lives could be saved annually.
Also higher taxes could result in additional yearly revenue of Rs 183.2 billion for the government.
Past research by Dr Jha has shown that about 6,72,000 people in between the age group of 30 and 69 years die in India every year due to the harmful effects of tobacco. Bidi and cigarette smokers die six to 10 years earlier as compared to their non-smoking counterparts.
The health experts say that tobacco-related illness and death costs the Indian government around Rs 30,000 crore. Tax increase on bidis alone would lead to an additional revenue of Rs 36.9 billion and avert 15 lakh premature deaths.
The report said, "Tobacco taxes in India are not regularly adjusted for inflation and over time, tobacco products are becoming increasingly affordable."
Complex tax system in India
The report also said that apart from the low rates, taxes in India are complex. Cigarettes are taxed according to their length; however there are differential taxes on hand-rolled and machine rolled bidis.
Dr Jha said that the Indian government must take some action and simplify the system by doing away with the differential tax system to give a clear message that all tobacco products are harmful.
As compared to other countries, the quitting rate is quite low in India; just two percent of smokers are ex-smokers as compared to 40 percent in the U.S. and the UK, 15 per cent in Thailand and nine percent in China.
