India
A study conducted by the Institute for Studies in Industrial Development (ISID) and Public Health Foundation of India (PHFI) said 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 was an advantage for both public health and revenue generation, Henk Bekedam, WHO representative to India, said that tax burden on tobacco products was not in line with the WHO Framework Convention on Tobacco Control (FCTC) recommendations, which says excise taxes should account for at least 70% of retail prices of tobacco products.
According to Article 6 of 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.
The study recommended that tax on all types of tobacco products should be increased substantially and further the tobacco tax regime should be broadened to include the unorganized manufacturing sector under the tax net.
It 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 health ministry report, which estimated that the total economic cost attributable to tobacco use from all diseases in 2011 amounted to a staggering Rs.1,04,500 crore (US$22.4 billion) in India, equivalent to 1.04% of India’s GDP.