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Levying 40% sin tax on tobacco products sought

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A voluntary action group has urged the Goods and Services Tax (GST) council to levy sin tax to the tune of 40 percent on all forms of tobacco products.

Consumer Voice, the group, believes that taxation reform like GST on tobacco products can help discourage the consumption of such products among users.

Nearly one million people die due to tobacco-related diseases in India and there are over 2-3 lakh new cases of oral and neck cancer witnessed annually in India.

The group says it has been proven globally that the most direct and effective method for reducing tobacco consumption is to increase the price of tobacco products through taxation.

“The total direct and indirect cost of diseases attributable to tobacco use was a staggering Rs 1.04 lakh crore ($17 billion) in 2011 or 1.16 percent of the GDP,” the group said in a statement.

Tobacco-attributable direct medical costs alone are around 21 percent of national health expenditure.

“The costs of tobacco are far greater than what the Indian government/states gain in tobacco excise revenue (just 17 percent of total health cost),” the group added.

“The GST regime should discourage consumption of that hazardous substances like cigarettes, beedis, pan masala, khaini and zarda through higher taxes, the statement said quoting Ashim Sanyal, Chief Operating Officer, Consumer Voice.

Beedis should be taxed at the same level as all other tobacco products under GST, since lower GST rates on beedis will promote its use amongst our most vulnerable populations and keep them below the poverty line.”

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