Before GST meeting, experts push for higher tax on bidis

New Delhi: Health experts have asked the Union finance ministry to tax bidis uniformly on the lines of other tobacco products under the new indirect tax framework, which is expected to kick in from July 1. The goods and services taxes council will meet Saturday.

Health experts said all tobacco products, including bidis, should be placed in the the “demerit goods” category at 28 per cent GST rate, with additional levy of the highest possible cess.

People familiar with the matter said the GST council may discuss the rate slabs for different goods and services. With the total tax burden currently at 53 per cent, 19.5 per cent and 56 per cent, respectively, for cigarettes, bidis and smokeless tobacco, taxation in India is much lower than the level recommended by the WHO.

With 10 lakh tobacco-triggered deaths every year, public health advocates believe that the government’s taxation policies in the tobacco sector have left public health concerns unanswered.

Classifying different tobacco products in lower rate GST slabs will be a distortion and will send a wrong message, said Bhavna Mukhopadhyay, CEO, Voluntary Health Association of India.

“At least a 10 per cent increase in the effective excise on tobacco product has almost been a norm in the past several years, and a mere six per cent increase is a major setback for public health in our country. We hope that the Finance Minister will ensure a significant increase in tobacco taxation and decrease in the affordability of tobacco products while finalising the GST reform.”

Bidis are the most commonly used tobacco product in India, accounting for 64 per cent of all tobacco consumption. Bidis contribute to the majority of the 10 lakh deaths attributable to tobacco as well as the staggering economic burden caused by tobacco use.

According to Dr. Rijo John, Assistant Professor, IIT Jodhpur, “Unless corrective measures are taken in the impending GST by bringing all tobacco products under the highest demerit rate of 28% + the highest possible cess, it would be a severe blow to the public health in India.”

Dr. Pankaj Chaturvedi, Oncologist, Tata Memorial Hospital, Mumbai said, “I see no logic in giving tax subsidy to a product that carries a product warning that it kills. In fact, it is the cheapest and unregulated poison currently available in the market. With current tax pattern, consumer and the nation both are at a loss”.