Hike tax on tobacco to reduce affordability and protect children: K’taka body

In the backdrop of the upcoming 45th GST council meeting, Consortium for Tobacco-Free Karnataka and other organizations working on tobacco regulation on Tuesday urged the GST council to hike the compensation cess on all tobacco products so that they become unaffordable for the vulnerable, especially children.

Representatives of Consortium for Tobacco-Free Karnataka (CFTFK) met Commercial Tax Commissioner Shikha and the Chief Minister’s Secretary Ponnuraj and discussed with them about the urgent need to hike tobacco tax, reduce tobacco consumption and also how this move will augment the revenues of the government to tide over the economic crisis caused by the Covid pandemic.

CFTFK has also written to Chief Minister Basavaraj Bommai and Additional Chief Secretary ISN Prasad requesting their support to raise the topic in the GST council meeting.

The upcoming GST council session scheduled to be held on September 17 at Lucknow will be the first physical meeting since COVID-19 hit India, It is said that the council will discuss the ‘compensation cess’.

Tobacco tax hike has been one of the effective policies to reduce smoking and tobacco use, especially among children. The recent Global Youth Tobacco Survey (GYTS) reveals that 38 per cent of cigarettes, 47 per cent of bidis and 52 per cent of smokeless tobacco users picked up the habit before their 10th birthday.

Since the introduction of the GST regime in July 2017 there hasn’t been any major hike in tobacco tax.

The total tax burden (taxes as a percentage of the final tax-inclusive retail price) is about 52.7% for cigarettes, 22% for bidis and 63.8% for smokeless tobacco.

This is much lower than the World Health Organization (WHO) recommended tax burden of at least 75% of the retail price for all tobacco products. According to the WHO, raising the price of tobacco products through tax increases is the most effective policy to reduce tobacco use.

Higher tobacco prices decrease affordability, encourage quitting among users, prevent initiation among non-users, and reduce the quantity.

Oncologist Dr Vishal Rao who is also a member of the Karnataka government’s High-Power Committee for Tobacco Control said, “On a day-to-day basis, we find several people, especially those from vulnerable groups, spending their hard-earned money on cancer treatment. One in every third person uses tobacco in one form or the other. Hence, one in every third person is likely to contract some form of the disease if this alarming trend continues. By raising the tax on tobacco, we can break this vicious trend and safeguard the future of lakhs of people. The ongoing pandemic has forced us to make health our number one priority and raising tobacco tax will be a key step in that direction.”

“We discussed with officials and have conveyed how this tobacco tax hike is needed to protect children. Chief Minister Bommai was representing Karnataka at the GST Council meetings all these years and he had pitched the idea of hiking taxes on luxury goods, tobacco and pan masala. We are hopeful that Bommai will raise the issue again,” said S J Chander, Convenor, Consortium for Tobacco-Free Karnataka.