India’s taxes on tobacco items not enough: WHO

Aditi Tandon

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Tribune News Service

New Delhi, July 7

A comprehensive stocktaking by the WHO of anti-tobacco measures adopted by nations has shown India is not taxing cigarettes enough and is in the lower-rung in South Asia on the list of countries that are imposing prohibitive tobacco taxation.

“Too few governments levy appropriate levels of tax on cigarettes and other tobacco products. They miss out on a proven measure to curb demand for tobacco; save lives and generate funds for stronger health services,” WHO’s Report on the Global Tobacco Epidemic 2015 released today says. The report focuses on raising taxes on tobacco and looks at which country has gone how far to use this simple anti-tobacco measure.

The conclusion is not heartening – only 33 countries impose taxes that represent more than 75% of the retail price of a packet of cigarettes and many countries continue to have low tax rates.

India’s tax rate is among the lowest in South Asia and South East Asia where Bangladesh leads the list of nations imposing prohibitive tobacco taxation to save lives. India imposes tax that represents just 53.4% of the retail price of the most sold pack of cigarettes (20 sticks) whereas Bangladesh tax rate is as high as 76%; followed by Sri Lanka at 73.78%; Thailand at 73.13%, Indonesia at 65.79% and Pakistan with 60.7%. The tax rate on the region is the lowest in Afghanistan at just 2.78%.

The report also reveals a strange anomaly in the Indian cigarette tax system. It documents the fact that India levies tiered specific excise taxes on cigarettes with seven brackets of basic excise duty based on cigarette length and whether or not there is a filter.

The WHO says: “These differential taxes lead to loopholes. One popular brand, Gold Flake, is sold in 84 mm, 74 mm and 64 mm lengths. The 74 mm version is marketed as the premium brand but is subject to the second lowest excise duty applied to cigarettes which is Rs 509 per 1,000 sticks despite being priced similarly to the 84 mm version which bears an excise of Rs 2,390 per 1,000 sticks.