HLive|New Delhi, Feb 17 Price of Tobacco products are cheaper than essential food items in India, said a new study.
The study conducted by the Institute for Studies in Industrial Development (ISID) and Public Health Foundation of India (PHFI) stated that the main reason is the non-increase of prices of tobacco products in comparison to the essential food items.
Among the products whose price has not increased over the years include cigarette, bidi and smokeless tobacco products.
“The current excise and Value Added Tax (VAT) rates are insufficient to increase the prices of tobacco products, therefore making these products easily affordable.”
Highlighting that tobacco taxation as a fiscal policy is a advantage for both public health as well as revenue generation, Henk Bekedam, WHO Representative to India said, “A comprehensive tax policy leads to reduction in tobacco use especially among young people and at the same time provides increased revenues to the government.”
“It has also been seen that affordability, in relation to income, of tobacco products is increasing at the national level, except for recent years,” he said adding that this is true even for the poorest households in the country.
The tax burden on tobacco products is not in line with the WHO FCTC recommendations, which says excise taxes should account for at least 70 percent of retail prices of the tobacco products.
In recent times, the share of tax burden has also declined; for cigarettes it declined from 55.3 percent in 2008 to 36.8 percent in 2013 and for bidis it has declined from 7.2 percent in 2011 to 5.3 percent in 2013.
The study corroborates the recent WHO Report on the Global Tobacco Epidemic, 2015, which indicated that cigarettes have become more affordable in India during 2008-14.
According to Article 6 of the World Health Organization Framework Convention on Tobacco Control (WHO FCTC) to which India is a party, the prices of tobacco products must be increased periodically to make them inflation-adjusted and there should be a uniform increase in tax rates across products.
“Tobacco taxation policy is the most cost effective strategy for tobacco control and has the ability to affect consumption, prevalence and affordability. Higher prices of tobacco products can promote cessation and prevent initiation among young people,” said K. Srinath Reddy, President, Public Health Foundation of India.
The study recommended that the tax on all type of tobacco products should be increased substantially and further the tobacco tax regime should be broadened to include unorganized sector manufacturing under the tax net.
It has also recommended that the tax exemptions on production of less than two million bidis should be eliminated and tax slabs on cigarettes based on length should be eliminated in a phased manner.
These findings come on the heels of another Ministry of Health & Family Welfare report, which estimated that the total economic cost attributable to tobacco use from all diseases in the year 2011 amounted to a staggering Rs. 1,04,500 crores (US$ 22.4 billion) in India, equivalent to 1.04 percent of India’s Gross Domestic Product.