Price of tobacco products may be a growth in the near future. The Union Ministry of Health wrote to all States to either tax or an increase in VAT on all tobacco products - cigarettes, beedis, smokeless tobacco (gutka and pan masala), tobacco and tobacco leaves.
Studies have shown that a 10% rise in prices will lead to beedi 9.2% decrease in consumption of beedi, while 10% jump in cigarette prices would reduce cigarette consumption by 3.4%. In India, 10 lakh deaths every year are tobacco alone. It is assumed that by 2020 tobacco will account for 13% of all deaths in India every year. Almost 35% of adults (aged 15 and older) consume tobacco in India (47% men and 21% of women).
Some countries have begun charging a high rate of VAT on tobacco products - Rajasthan (40% VAT on all types of tobacco products), Gujarat (25% VAT), Odisha (25% VAT) and Jammu and Kashmir (30% VAT on all tobacco products).
Additional Secretary in the Ministry of Keshav Desiraju in his letter said: “Tobacco use leads to a heavy burden of disease, disability and death in this way imposes high medical costs and productivity. According to a study conducted by the health value of the Indian Council of Medical Research, the cost of treatment of all three diseases caused by tobacco - cancer, pulmonary disease and chronic obstructive pulmonary disease accounts for approximately 25% of total government expenditure on health care. ”
He added: “One of the most effective ways to reduce tobacco consumption by making the unit price is higher to make them inaccessible or sensitive populations, such as poor or children or youth. We believe that the levy or increase in VAT on all tobacco products / materials will support the to prevent new initiation into tobacco use and to encourage smokers to quit. “Bhavna Mukhopadhyay, executive director of the Association of Voluntary Health India, said the upcoming budget of the Union all tobacco containing products should be subject to a high level of excise duty and VAT” to save the next generation of health. If the tax on tobacco goes up, government revenues will increase, while spending on health will go down. Today, tobacco products are affordable and easily accessible to minors. ”
Experts say that the taxes on tobacco products in India falls well below the level recommended by the World Bank - from 65% to 80% off the retail price. Taxes on beedis is very low, averaging only 9% of the retail price, whereas taxes on cigarettes account for about 38% of the retail price. About 5,500 people take tobacco in the day. It is believed that a tax increase as a percentage of the retail price of 7% to 33% beedis and from 43% to 58% on cigarettes leads to a conservative 14 million smokers to quit and 27 million children never start. This will save 69000000 years of healthy life for the next 40 years.
The growth will also generate about Rs 73000000000, or an additional 1.2% of government revenue. A study conducted by the National Institute of Public Finance and Policy in 2010, showed that the impact on the health of 52.8% price increase will be 4.6 million beedi prevent premature mortality among smokers and generate Rs 36.9 billion for the government. The increase in cigarette prices by 158% to prevent additional 1.8 million premature deaths among smokers and generate 146.3 billion rupees.
More than 120 million Indians smoke tobacco and 10% of the world’s smokers live in India. Almost a third of Indians - 57% of men and 11% of all women - consume some form of tobacco products, and many use more than one type of tobacco products. Beedis are the most popular tobacco products in India. Beedis accounts for almost 85% of the total number of smoked tobacco in India. By volume, cigarettes account for less than 15% of all tobacco smokers, but account for nearly 85% of the taxes on tobacco products.