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Independent Professional: Experienced educator and management consultant for engineering educational institutions, researcher, trainer, technical consultant on sustainable technologies, related to cement manufacturing and characterisation, using industrial and agricultural wastes in cement and concrete, durability of concrete and fuel cell power.

Monday, August 3, 2009

Tax tobacco for good

Despite expectations following the increased taxation on tobacco announced in the state finance budgets of Maharashtra and New Delhi, India, the central government has made no changes whatsoever in the taxation on tobacco and tobacco products in the Union Budget for 2009 ­ 2010. This effectively means that the tobacco companies ­ already inducing a growing tobacco epidemic in the country ­ can continue to sell their products at their current prices ­which make these products easily available for the masses. This simply contributes to the continuing tobacco problem in India, and hampers public health to a great extent.

Speaking on the unchanged tax rates on tobacco products, be it cigarettes, bidis or gutka, tobacco control associations in India have voiced their protests. The tobacco analyst is wrong. The cigarette production is increasing in India and given the low elasticity of demand, the revenue collection is not going to go down for a long time" said Dr P C Gupta, director, Healis Sekhsaria Institute for Public Health . No country has yet reported that by increasing cigarette taxes, their revenue has gone down.

Increasing taxes on tobacco products could have benefited both the exchequer and public health. Increasing taxes on tobacco products has been shown to be the most cost effective tool for tobacco control and saves lives of people, especially protecting the youth and the poor. In India, 40 per cent of all diseases are due to tobacco use and the expenditure on its treatment, prevention and control costs around INR 400,000 million annually. Approximately 5500 adolescents start using tobacco every day, joining the 7.7 million young people under the age of 15, who already regularly use tobacco.

In the light of this, with an increase in taxes, a substantial increase in government revenue can be achieved. A 33 per cent increase in tax on bidis (rural version of cigarettes in India) and a 10 per cent increase in tax on cigarettes would result in 24.75 per cent and seven per cent increase in government revenue, respectively.

An increase in bidi taxation would also mean an increase in the part of the excise duty on bidis that goes to Bidi Workers Welfare Cess (BWWC), which aims to provide medical care, housing, social security, education and recreation facilities for bidi workers. The government should, therefore, make provisions for a substantial increase in taxation on all tobacco products across the country and take a step forward towards better public health.

Ref: Sakal Times, Pune, India, 31 July 2009

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