Tobacco kills up to half of its users i.e. more than 8 million people each year. More than 7 million of those deaths are the result of direct tobacco use while around 1.2 million are the result of nonsmokers being exposed to secondhand smoke. India is home to the largest consumers of tobacco in the world. This includes the largest tobacco chewing population in the world and the second largest population of those who smoke it.
The Global Adult Tobacco Survey India (GATS), reports that nearly 267 million adults (aged 15 years and above) in India (29 per cent of all adults) are users of tobacco. Tobacco use is responsible for a range of health problems, including lung cancer, heart disease, respiratory illnesses, and stroke.
Tobacco use therefore is a major public health concern in India, causing a significant burden of non-communicable diseases and premature deaths. There are various measures implemented by the Government of India to address the tobacco burden, including warning labels on tobacco products, bans on advertising and promotion etc. but despite these efforts, the tobacco burden in India remains a significant public health challenge that requires continuing attention and action.
In 2017, the economic burden and health-care expenses due to tobacco use and secondhand smoke exposure amounted to Rs 2,340 billion, or 1.4 per cent of GDP while India’s average annual tobacco tax revenue stands at only Rs 537.5 billion.
The substantial increase in tax on these lethal substances will close the gap. Economists also suggested that increasing inflation, which has put the country’s budget under pressure, and urgent need for fresh cash can be met by levying taxes on demerit products like tobacco.
Despite the government’s goal of making India a $5 trillion economy, the increasing affordability of tobacco poses a threat to this vision and could harm GDP growth.
The World Health Organization (WHO) in 2007 introduced a practical, cost-effective way to scale up implementation of the WHO Framework Convention on Tobacco Control (FCTC) on the ground.
MPOWER provided six parameters to reduce tobacco demand namely; (1) Monitor tobacco use and prevention policies; (2) Protect people from tobacco use; (3) Offer help to quit tobacco use; (4) Warn about the dangers of tobacco; (5) Enforce bans on tobacco advertising, promotion, and sponsorship; and (6) Raise taxes on tobacco. Therefore, higher taxation on tobacco products is a vital strategy for reducing tobacco consumption.
However, in India, taxes on tobacco products are far behind this standard. India is among 182 countries which has signed the WHO FCTC which recommends at least 75 per cent tax on retail price of all tobacco products.
However, in India, the GST rate on cigarettes and tobacco products is at 28 per cent. This includes products such as pan masala, cigars, cigarillos, hookah, and other similar products. A compensation cess is levied under the GST law on cigarettes and tobacco products as the same falls under the category of sin goods.
Tobacco taxation in India has always had discrepancies and there was a high hope from the Union Budget 2023. But the Government seemed oblivious to the mounting threat due to tobacco consumption.
While tobacco taxation is primarily under the purview of the GST Council, the Union Government also levies a National Calamity Contingent Duty (NCCD) on cigarettes, which is subject to changes in the Budget. There is a 16 per cent increase in NCCD in the 2023 Union Budget. It effectively increases the overall taxes on cigarettes only by about 1.8 per cent, and its expected impact on the retail price of cigarettes is just about 1 per cent. So, tobacco products continue to be affordable in India despite the latest 16 per cent hike in NCCD.
The budget was completely silent on any tax revisions on bidis or smokeless tobacco, which are consumed by most Indian tobacco users.
It is pertinent to mention here that cigarettes account for only 15 per cent of tobacco users in India. There are reports which establish that cigarette smokers switch to bidis when cigarettes become exorbitant; this is equally detrimental to health.
For public health professionals this negligible tax increase on cigarettes in the Union Budget and leaving taxes on other tobacco products unaffected was a major disappointment.
This namesake tax revision has been seen as a gift to the tobacco industry while bringing a significant blow to public health in general and tobacco control efforts in India in particular.
Paradoxically, it has been testified that the economic branch of Rashtriya Swayamsevak Sangh (RSS) has been advising the government to reduce taxes on bidis to reduce the burden on workers whose livelihoods depend on the industry.
The Swadeshi Jagran Manch also asserted recently that bidis should be kept out of the purview of the proposed amendments to the Cigarette and Other Tobacco Products Act (COTPA), as a hike in tax on bidis will adversely impact the livelihood of lakhs of workers engaged in the industry and may even push many of them into Naxalism.
The Standing Committee of Parliament on Health and Family Welfare in its 139th report entitled “Cancer Care Plan & Management: Prevention, Diagnosis, Research & Affordability of Cancer Treatment” submitted in September 2022 made very pertinent and comprehensive recommendations on cancer care plan and management.
The Committee in its considered opinion resolved that there is a critical need to disincentivise tobacco consumption. The Committee accordingly recommended the Government to formulate effective policies on tobacco control.
It explicitly acknowledged that India has one of the lowest prices for tobacco products and there is a need to increase taxes on tobacco products. The Committee accordingly recommended to the Government that it raise taxes on tobacco and utilize the additional revenue gained for cancer prevention and awareness.
However, recommendations of the Committee were ignored by the Government which is not a progressive trend.
A significant hike in tax on all tobacco products and stronger laws will not only bring the best out of human capital but also help in achieving PM Narendra Modi’s vision of a five trilliondollar economy by 2025.
(The writer is Vice Chancellor, National Law University of Tripura)