Economists, doctors for Covid cess on tobacco

Hyderabad: Public health groups along with doctors and economists are urging the GST Council to consider a special Covid-19 cess on tobacco products to raise additional tax revenue needed to contribute to funding the Covid-19 stimulus package. They are appealing for a Covid cess on cigarettes, bidis and smokeless tobacco products that can provide revenue of Rs 49,740 crore which could cover about 29 per cent of the stimulus package.

Imposing Covid cess on all tobacco products will not only help raise the much-needed revenue to fund the stimulus, it will also prevent the further spread of the virus especially amongst vulnerable populations by making tobacco products unaffordable and forcing them to quit.

Based on studies conducted in several countries, smokers and smokeless tobacco users may be at greater risk for severe illness when confronted with Covid-19 since it attacks the lungs and behaviors that weaken the lungs put individuals at greater risk.

According to Dr Rijo John, economist & health policy analyst, unprecedented financial resources will be needed for the country to recover from the economic shock Covid has created. Even though imposing additional taxes on the general public might not be a viable policy option when consumption needs to be boosted, special Covid cess on tobacco, could be a win-win as it will discourage tobacco consumption and reduce Covid related risks while bringing in substantial revenue for the government".

A Rs 1 Covid cess per stick of bidis and significant tax increases on cigarettes and smokeless tobacco products are expected to generate additional tax revenue to the tune of Rs. 50,000 crore, he added. Increasing taxes on all tobacco products will not only reduce their affordability and therefore consumption, but also to limit the increasing health and fatal damages caused by tobacco.

"There is ample evidence about bidis being the killer and not the pleasure of the poor. These should be made unaffordable for the poor to save them from a lifetime of misery and suffering. Imposing cess on all tobacco products, including bidis, is a winning proposition for Government as it will provide the much needed additional tax revenue for Covid stimulus package for providing relief to the people of the country while motivating millions of tobacco users to quit and preventing youngsters from initiating tobacco use," Dr Harit Chaturvedi, Chairman of Max Institute of Cancer Care.

The World Health Organisation (WHO) recommends total taxes to represent at least 75 per cent of the retail price for all tobacco products. Currently, the total tax burden (tax expressed as a percentage of final retail price) is only 49.5 per cent for cigarettes, and 63.7% for smokeless tobacco in India, well below the minimum recommended by the world body.