In January 2015, the Indian government had asked for public opinion on tougher new laws to curb smoking- To raise the minimum smoking age to 21 years from the current 18 years, and to ban the sale of single cigarettes, which account for 70% of nationwide cigarette sales. People responded enthusiastically with around 45,000 emails and 100,000 letters poured in to the health ministry. However, the sad part is that the government has not yet read the messages, revealed a health ministry representative.
Like those messages, the World Health Organization's (WHO) Report on the Global Tobacco Epidemic 2015 is largely ignored in India. Its single-line message- Raising tobacco taxes can help curb smoking. Curbing smoking is very important to India for two reasons- About one million Indians die from smoking-related causes every year, which are among the top three ways to die; and smoking also saps Indians of money; more money, it emerges, than it earns for the government.
AdvertisementIndians aged 35 to 69 years spent Rs. 104,500 crore ($15.9 billion) in 2011 on diseases associated with tobacco-including cancer, respiratory diseases, tuberculosis and cardiovascular diseases. The Indian government, WHO and the Public Health Foundation of India said, "This figure is almost six times as much as central excise tax collections from all tobacco products that year."
To put the health cost of tobacco in further perspective, it exceeded the combined annual state and central government expenditure on health care by 12% in 2011. Taxes on cigarettes rise, but not enough. The WHO suggests that a 10% price increase on tobacco products could cut consumption between 2.8% in developing nations. Tax hikes increase prices, which in turn lower demand and protect people from the harmful effects of tobacco.
Arun Thapa, acting WHO representative to India, said, "Raising taxes is a win-win situation. It's good for human health and for the country's fiscal health." Over the last 19 years, taxes on cigarettes in India have risen 1,606%, but that is not quite enough and the six-tier tax structure is so complex - based on stick lengths and filters - that companies manipulate it with relative ease to keep demand intact.
The biggest problem in curbing tobacco use lies with the bidi. Taxes on a pack of bidis are 7% of the retail price, less than a tenth of the WHO's suggested level of 75%. A 20-stick pack of best-selling cigarettes is taxed around 60% of the retail price. Bidi smokers make up 61% of the nation's 120 million smokers, according to the Global Adult Tobacco Survey (GATS) 2010. This is a conservative estimate. Some studies peg the numbers of bidi smokers higher, at 73% and even 85%.
Bidi smokers face a higher risk of developing potentially-fatal chronic obstructive pulmonary disease (COPD), among other diseases, because tobacco is packed more loosely in bidis, requiring smokers to inhale more strongly. Bidi barons argue that millions of jobs and livelihoods at stake, so taxes must stay low. Sudhir Sable, secretary, All India Bidi Industry Federation, said, "Imposing taxes on bidis and introducing pictorial warnings on bidi packs would lower demand. Any fall in production would jeopardize the jobs of bidi rollers. It would also adversely impact tobacco farmers, as well as the thousands of corner shops selling the product. Increasing taxes on bidis would invariably increase the illicit trade in bidis, leading to the proliferation of fake bidis. It would also deprive states and the central government of tax revenue."
A Public Health Foundation of India study said, "There is indeed scope for taxes on bidis to be increased." Monika Arora, director, Health Promotion and Tobacco Control Initiatives, Public Health Foundation of India said, "Doubling bidi excise would help cut consumption by 40% and increase tax revenue by 22%."
Prabhat Jha, founding director of the Center for Global Health Research, University of Toronto, said, "Money not spent on bidis or cigarettes will not disappear from the economy. It will be spent on other products which generate employment."
Additional revenue could help the government meet the cost of transitioning bidi workers to some other means of employment. The government had previously considered a cess on cigarettes to encourage farmers to switch from tobacco to other crops. Taxing all segments of the tobacco-products industry can be helpful.