'Moderate' taxes on tobacco under review; brace up for more

The health ministry has constituted an expert group to look into the taxation pattern of tobacco products from a public health perspective. The group will recommend various models of tax rates and standards to be considered in Budget 2022.

Cigarettes and tobacco attract 28% Goods and Services Tax (GST), and an additional cess levied by the Centre. India is considered to be a nation that taxes tobacco moderately.

In an official memorandum issued on October 12, the ministry said the terms of reference of the group will be to analyse the existing tax structure for all forms of tobacco (smoking and smokeless) and develop a roadmap for tobacco tax policy. The objective is the to make India comply with the World Health Organization’s MPOWER (Monitor tobacco use and impact of prevention policies; Protect people from tobacco smoke; Offer help to quit tobacco use; Warn about the dangers of tobacco; Enforce bans on tobacco advertising, promotion, and sponsorships; Raise taxes on tobacco policy.

The nine-member expert group includes Vikas Sheel, additional secretary, health ministry, and representatives of NITI Ayog, Department of Revenue, GST council and WHO India office. Pulkesh Kumar, deputy secretary, health ministry, has been appointed as the coordinator.

A paper published in the Journal of Family Medicine and Primary Care says India continues to be the second-largest consumer of tobacco in the world. It quotes the Global Adult Tobacco Survey (GATS-II) to point out that 28.6% adults (267 million) in the age group of 15–24 use tobacco in some form, out of which, about 100 million smoke tobacco, while the rest use smokeless tobacco. It also points out that in India, about 9,30,000 people die due to smoking and about 3,50,000 due to smokeless tobacco use every year, together accounting for about 12,80,000 deaths per year. The total economic cost of tobacco use resulting from direct health expenditures and indirect costs from premature deaths and productivity loss is estimated to be 1.16% of India’s GDP in 2011, according to the report by Sarit K. Rout and Amrita Parhi.