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India raises taxes on cigarettes
World Report
India raises taxes on cigarettes Public health experts have welcomed the increase in taxes for cigarettes and other tobacco products included in India’s latest budget. Dinesh C Sharma reports from New Delhi.
Sanjit Das/Bloomberg via Getty Images
The Indian Government is clamping down on tobacco consumption by imposing higher taxes on cigarettes, chewing tobacco products, and unmanufactured tobacco. The increase in excise duty in the range of 11–72% for different types of cigarettes is the steepest in a decade. With this move, government taxes are projected to account for around 70% of the retail price of some cigarette types. The levies are seen as a result of strong advocacy by new health minister Harsh Vardhan, who is an ear, nose, and throat surgeon and an anti-tobacco champion. He had recommended an across-the-board increase in tax on tobacco products to the finance ministry while the national budget was under preparation. Nearly 1 million deaths in India each year are attributable to tobaccorelated diseases. The death toll is set to rise as the absolute number of male smokers is rising—from 83 million in 1998 to 105 million in 2010, according to data published by the Centre for Global Health Research in 2013. Young men aged between 15–24 years accounted for the largest proportion of the increase in male smokers during this period. Besides cigarettes, Indians smoke bidis and consume a range of tobacco-
392
based chewing products. Bidis are made by rolling a dried piece of temburini leaf (Diospyros melanoxylon), stuffing it with flaked tobacco, and securing the leaf with a thread. Taxes haven’t been increased for bidis but some experts feel targeting cigarettes
“Nearly 1 million deaths in India each year are attributable to tobacco-related diseases.” is a smart public health strategy. “Cigarettes are displacing bidis and are more harmful as they contain four times more tobacco than bidis, even though all smoking is harmful”, says Prabhat Jha, director, Centre for Global Health Research, University of Toronto, Canada. “The cigarette industry wants to keep the price difference between cheap cigarettes and bidis narrow enough so that they can draw bidi smokers to cigarettes. Our research shows that the past 10 years or so have seen a marked growth in cigarette sales at the expense of bidis.” Indian tax rates for cigarettes have been based on their length and filter type, which makes unfiltered and smaller cigarettes relatively cheaper. Rijo John, a health economist at the Indian Institute of Technology, Jodhpur, notes that the new tax regime effectively removes differentiation based on filter but retains layered tax rates for cigarettes of different lengths. Health experts want to see this changed. “If the tax hike in this year’s budget is any indication, the government is moving in the right direction...But it should eventually abolish differentials based on length. A uniform specific tax on all types of cigarettes is desirable”, John says. Opinion about precise health dividends of the present hike seem to be divided. Health minister
Vardhan, in his letter to the finance ministry, mentioned that “raising the proportion of specific tax on cigarettes as a percentage of their retail price from about 45% to more than 60% of the retail price of cigarettes would, conservatively, lead to around 3 million smokers quitting and nearly 3 million children not starting to smoke”. Some health advocates, however, expect the gains to be modest. Prakash C Gupta, director, Healis-Sekhsaria Institute for Public Health, Navi Mumbai, says: “For weaning away existing smokers, the tax increase needs to be much heftier. These increases are barely keeping pace with inflation. Hopefully, even this modest increase would deter a few young people from starting smoking.” Pankaj Charurvedi, a cancer surgeon at the Tata Memorial Hospital, Mumbai, and an anti-tobacco campaigner says bringing in bidis into the tax net is crucial: “Taxes on bidis— currently abysmally low—serve as an incentive for tobacco users rather than a deterrent. There is no logic in giving tax subsidy to a product that carries a warning that it ‘kills’.” Jha feels it is important to focus on smoking products in the future because inhaled tobacco smoke causes a higher burden of disease and more diverse types of disease than oral tobacco products. Smoking also creates adverse health consequences for non-smokers unlike oral tobacco use. Tax administration and regulation are far more feasible for smoking products than controlling a large and informal market for chewing tobacco. Moreover, he says, progress in taxation of smoked products will enable future control of smokeless tobacco.
Dinesh C Sharma www.thelancet.com Vol 384 August 2, 2014
India raises taxes on cigarettes Public health experts have welcomed the increase in taxes for cigarettes and other tobacco products included in India’s latest budget. Dinesh C Sharma reports from New Delhi.
Sanjit Das/Bloomberg via Getty Images
The Indian Government is clamping down on tobacco consumption by imposing higher taxes on cigarettes, chewing tobacco products, and unmanufactured tobacco. The increase in excise duty in the range of 11–72% for different types of cigarettes is the steepest in a decade. With this move, government taxes are projected to account for around 70% of the retail price of some cigarette types. The levies are seen as a result of strong advocacy by new health minister Harsh Vardhan, who is an ear, nose, and throat surgeon and an anti-tobacco champion. He had recommended an across-the-board increase in tax on tobacco products to the finance ministry while the national budget was under preparation. Nearly 1 million deaths in India each year are attributable to tobaccorelated diseases. The death toll is set to rise as the absolute number of male smokers is rising—from 83 million in 1998 to 105 million in 2010, according to data published by the Centre for Global Health Research in 2013. Young men aged between 15–24 years accounted for the largest proportion of the increase in male smokers during this period. Besides cigarettes, Indians smoke bidis and consume a range of tobacco-
392
based chewing products. Bidis are made by rolling a dried piece of temburini leaf (Diospyros melanoxylon), stuffing it with flaked tobacco, and securing the leaf with a thread. Taxes haven’t been increased for bidis but some experts feel targeting cigarettes
“Nearly 1 million deaths in India each year are attributable to tobacco-related diseases.” is a smart public health strategy. “Cigarettes are displacing bidis and are more harmful as they contain four times more tobacco than bidis, even though all smoking is harmful”, says Prabhat Jha, director, Centre for Global Health Research, University of Toronto, Canada. “The cigarette industry wants to keep the price difference between cheap cigarettes and bidis narrow enough so that they can draw bidi smokers to cigarettes. Our research shows that the past 10 years or so have seen a marked growth in cigarette sales at the expense of bidis.” Indian tax rates for cigarettes have been based on their length and filter type, which makes unfiltered and smaller cigarettes relatively cheaper. Rijo John, a health economist at the Indian Institute of Technology, Jodhpur, notes that the new tax regime effectively removes differentiation based on filter but retains layered tax rates for cigarettes of different lengths. Health experts want to see this changed. “If the tax hike in this year’s budget is any indication, the government is moving in the right direction...But it should eventually abolish differentials based on length. A uniform specific tax on all types of cigarettes is desirable”, John says. Opinion about precise health dividends of the present hike seem to be divided. Health minister
Vardhan, in his letter to the finance ministry, mentioned that “raising the proportion of specific tax on cigarettes as a percentage of their retail price from about 45% to more than 60% of the retail price of cigarettes would, conservatively, lead to around 3 million smokers quitting and nearly 3 million children not starting to smoke”. Some health advocates, however, expect the gains to be modest. Prakash C Gupta, director, Healis-Sekhsaria Institute for Public Health, Navi Mumbai, says: “For weaning away existing smokers, the tax increase needs to be much heftier. These increases are barely keeping pace with inflation. Hopefully, even this modest increase would deter a few young people from starting smoking.” Pankaj Charurvedi, a cancer surgeon at the Tata Memorial Hospital, Mumbai, and an anti-tobacco campaigner says bringing in bidis into the tax net is crucial: “Taxes on bidis— currently abysmally low—serve as an incentive for tobacco users rather than a deterrent. There is no logic in giving tax subsidy to a product that carries a warning that it ‘kills’.” Jha feels it is important to focus on smoking products in the future because inhaled tobacco smoke causes a higher burden of disease and more diverse types of disease than oral tobacco products. Smoking also creates adverse health consequences for non-smokers unlike oral tobacco use. Tax administration and regulation are far more feasible for smoking products than controlling a large and informal market for chewing tobacco. Moreover, he says, progress in taxation of smoked products will enable future control of smokeless tobacco.
Dinesh C Sharma www.thelancet.com Vol 384 August 2, 2014