Hyderabad: Public health groups along with doctors and economists have urged the members of the GST Council to retain tobacco products as demerit goods at the highest tax rate of 28 per cent plus cess under GST.
In a statement issued by Voluntary Health Assocaition of India, they applauded the government for its decision to include cigarettes and smokeless tobacco in the highest tax slab for its long lasting impact on the lives of India’s 268 million tobacco users.
Tobacco taxes are particularly effective in reducing tobacco use among vulnerable populations. The statement described it as ironical that beedis were not classified as a ‘sin’ product under GST even though it is as harmful as cigarettes. Beedis contribute to majority of the 10 lakh deaths in India every year as well as the staggering economic burden caused by tobacco use and tobacco related diseases. The statement requested that bidis, like cigarettes and smokeless tobacco, also be classified as a demerit good and taxed accordingly.
WHO recommends that countries impose tobacco excise taxes that amount to at least 75 per cent or more of retail price to achieve the dual objective of reducing tobacco use and increasing government revenue. The overall tax rate on all tobacco products in India is still low very compared to other middle-income countries including those in South Asia, the VHAI said.