Union Budget 2014-2015: Tobacco products and cigarettes set to get more expensive

Sticking to pre-Budget predictions, the Union Finance Minister Arun Jaitley proposed a higher sin tax on tobacco products like cigarettes, pan masala, gutka, etc to promote good health. ‘Likewise, t

By: Nirmalya Dutta | | Updated: July 11, 2014 4:11 pm

Sticking to pre-Budget predictions, the Union Finance Minister Arun Jaitley proposed a higher sin tax on tobacco products like cigarettes, pan masala, gutka, etc to promote good health. ‘Likewise, the excise duty is being increased from 12 percent to 16 percent on pan masala, from 50 percent to 55 percent on unmanufactured tobacco and from 60 percent to 70 percent on gutka and chewing tobacco,’ he said. Also Read - Ganesh Chaturthi 2020: 4 reasons an eco-friendly Ganesha is good for you

Anti-tobacco campaigner and cancer surgeon Dr Pankaj Chaturvedi was quite happy with the new budget. He told us: ‘I congratulate the Finance Minister for hiking excise on cigarette. It will reduce the consumption by 5%. Raise of tax on chewing tobacco is also a great effort.’ However, he’s still disappointed about the fact that there was no hike in taxes on bidis which are actually much more common than cigarettes amongst Indians.’ Dr Chaturvedi was part of a group of 300 doctors who wrote to Prime Minister Modi to raise taxes. He also met Arun Jaitley along with them and gave their presentation on the harmful effects of tobacco. He added: ‘I am happy that tax hike has finally happened!’ Also Read - This is how smoking, tobacco use make you more vulnerable to COVID-19

India remains one of the cheapest places to buy cigarettes in the world. A packet of medium-sized cigarettes here cost around $3 while the same packet costs around $5 in the US, $13 in the UK, $9.5 in France and is just as high in most developed countries that have cracked down on smoking. Sadly, in India the rates are comparable to other developing countries and thus are very affordable for most people. Also Read - 7 reasons why the #BeefBan is good

Also, most people don’t smoke cigarettes at all and cigarette smokers only constitute 3% of total smokers. Most people either smoke beedis or use smokeless tobacco which is far cheaper. The practice of buying single cigarettes is also unique to Indians which often hooks young children who’d never be able to afford the entire pack.

Despite such stringent attempts taken by the government some foundations that vehemently oppose tobacco use among public. ‘Our expectations from the Union Budget were quite high. The tax raise comes as a trivial effort as compared to the magnitude of the problem. We, though, appreciate Modi’s commitment towards a forming healthier and stronger India. The massive rise in taxes would distant the young generation, which falls for tobacco consumption due to contemporary influences, from the life threatening substance,’ said Devika Chadha, vice president operations, Salaam Bombay Foundation.

Tobacco products like gutkha and paan masala are already banned in Maharashtra and tax raise on cigarettes would be instrumental in wiping the tambaku menace from the state to a large extent. The decision, to an extent, has also been a morale booster for activists who continue crusading against tobacco consumption like Salaam Bombay.

Will higher taxes work?

WHO seems to think it will. In an earlier release, the WHO asked governments to raise taxes on tobacco to curb their consumption. ‘Research shows that higher taxes are especially effective in reducing tobacco use among lower-income groups and in preventing young people from starting to smoke. A tax increase that increases tobacco prices by 10 percent decreases tobacco consumption by about four percent in high-income countries and by up to eight percent in most low and middle-income countries,’ the WHO said in a release. The World Health Report 2010 indicated that a 50-percent increase in tobacco excise tax would generate a little more than $1.4 billion in additional funds in 22 low-income countries.

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.

Ritesh Hati, a smoker said: ‘Even though I am a smoker, I feel the hike is good in a way because it will help me cut down. I will not smoke during every chai break as I won’t be able to afford it all the time so that is a good thing. After all, every smoker thinks of quitting some day or the other, maybe this will help.’ So will this year’s budget help you quit? Tell us.

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Published : July 10, 2014 3:26 pm | Updated:July 11, 2014 4:11 pm

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