Will an increase in taxes discourage people from using tobacco?
Dr Harsh Vardhan is a man on a mission. After meeting with anti-tobacco campaigners, the Union Health Minister wrote to Finance Minister Arun Jaitley asking him to increase the taxes on cigarette and other tobacco-related products to reduce their consumption. He also asked the FM to remove the tax exemption granted to bidi manufacture. A group of public health experts met Dr Harsh Vardhan last week and explained how higher taxes would help reduce tobacco consumption citing examples from other countries where it has worked. ‘Tobacco taxes are always a good way of raising revenues while accruing health benefits, and we are looking at the possibility of increasing taxes not only on cigarettes, but also on chewing tobacco, bidis etc,’ officials said.
Despite having so many tobacco consumers, the average tax on a pack of cigarettes is just 43% which is lower than the levy of 65-80% suggested by the WHO. In the letter, Dr Harsh Vardhan also pointed out that users tend to shift from longer to shorter cigarettes whenever there is a tax hike and the there should be a blanket hike on all forms of cigarettes including long and short ones.
The government will also look to tax heavily smokeless products and bidis which often escape the heavy taxes inflicted on cigarettes. From now on, makers of pan masala and gutka will feel the heat as taxes are to be linked to the capacity of a gutka factory and not to the size of the packet of tobacco. It’s believed that this will earn the government Rs 4000-5000 crore while saving millions of lives.
An earlier study has shown that an increase in tobacco price by 50% would help to avoid 4 million deaths and get 3 million to quit smoking while 3 million other potential smokers (children) would also be dissuaded.