Tuesday, 18 October 2016

Appeal to GST Council for highest tobacco tax

Concerned by 2015 World Health Organisation (WHO) Global Tobacco Epidemic report that finds India to be among the very few countries where cigarettes have become more affordable over the past years, Tobacco Free Kerala, along with other tobacco control groups in the country have appealed for the highest tax on tobacco to the GST Council.

The appeal is for the highest possible tax rate under GST on all types of tobacco including cigarettes, bidis, smokeless tobacco, and pan masala in order to discourage their consumption and addiction amongst Indians and safeguard public health. 

This is in the light of the WHO’s articulation that the most direct and effective method for reducing tobacco consumption is to increase their price through tax increases. Higher taxes are particularly effective in reducing tobacco use among vulnerable populations, such as youth, pregnant women, and low-income smokers. An increase in tobacco prices by 10 per cent decreases tobacco consumption by 4 percent in high-income countries and by about 6 per cent in low-and middle-income countries.

India has the second largest number of tobacco users in the world with 275 million or 35% of all adults in India. Each year, about 1 million Indians die from tobacco-related diseases and if current trends continue, tobacco will account for 13% of all deaths in India by 2020. Tobacco-use imposes enormous health and economic burden on the country as tobacco-attributable direct medical costs alone are around 21% of national health expenditure. 

According to Dr. Rijo John of IIT Jodhpur, “A recent report from WHO shows that current cigarette taxes as a percentage of retail prices in India are lower than even neighbouring countries such as Sri Lanka and Bangladesh and rank 80th in the world. GST at 40% coupled with central excise duty at the current levels would just about maintain the current tax burden on tobacco products. It is also important to allow states to maintain their right to impose top-up taxes on tobacco products, in order to actually make tobacco and tobacco products less affordable over time.”

Tobacco taxation in India is way below global standards. The current rates for cigarettes and smokeless is significantly less than that recommended by the World Bank’s 2/3rd (tax should be 67% of retail product price) and the WHO (tobacco excise taxes should account for at least 70% of the retail price).   

The current taxation system differentiates between various forms of tobacco products (such as bidis, smokeless tobacco and cigarettes) while imposing taxes.

Bidis, which comprise 48 percent of the tobacco market - as compared to chewing tobacco, which is 38 percent and cigarettes 14 percent - have been subjected to very low central and state taxes under the false pretext of protecting bidi rollers’ livelihood. 

Shri Nazim Ansari, Secretary Abul Kalam Azad Jan Sewa Sansthan, a representative of around 6,000 bidi workers in Uttar Pradesh said, “We strongly support the highest level of tax for bidis under GST and petition that some of these bidis taxes are used to improve our wages/living conditions as well as provide alternative livelihoods”. 

Shri Ashim Sanyal, Chief Operating Officer, Consumer Voice, a voluntary consumer organisation said, “The GST regime should ideally act as a deterrent to the consumption of health hazard causing substances such as cigarettes and bidis  through higher taxes under GST without any differentiations in the interest of vulnerable sections.”  

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Thursday, 13 October 2016

Chewable Tobacco Major Health Threat, Needs Regulation: Doctors

Chewable tobacco is emerging as a major threat in India when it comes to causing cancer that affects 11 lakh people a year, top doctors today said while urging the government to increase taxation on it to reduce its consumption.

Over 700 delegates from around 15 foreign countries have gathered in Delhi for a four-day global conference on head-neck cancer, organised by International Federation of Head and Neck Oncologic Societies (IFHNOS) and Foundation for Head-Neck Oncology (FHNO).

They also urged the government to remove tobacco and cigarette vendors from near school and college premises. There are 11 lakh incidences of cancer every year in India, as per the estimates of Indian Council of Medical Research (ICMR). And 2.5-3 lakh cases are of head and neck cancer. Over 80 per cent of head and neck cancer are caused by tobacco alone.

"Head and neck cancers are emerging as the major killers now, and if the sale and consumption of chewable tobacco like beedi-khaini, tambaku, gutka and zarda are not regulated, it will increase the country's health burden dramatically," said Dr Alok Thakar, professor of head-neck surgery and otorhinolaryngology at the AIIMS.

Dr Thakar, Organising Chairman of the conference, and a host of other oncologists from India's top cancer-cure institutions like Tata Memorial Centre, addressed a press conference here on the opening day of the conference today.

"27 per cent male population is affected by head-neck cancer while its incidence is 10-12 per cent in women. In foreign countries, lung cancer is more prevalent, as people smoke more tobacco than chew it, unlike in India, where every nook and cranny sell chewable tobacco in the open," he said.

"The incidences have increase in the last decade or so. 10-15 years ago, the incidence was about 8 lakh. People today consume gutka and zarda like saunf and that is very dangerous, more so the youth are consuming chewable tobacco from very early age," he added.

Dr Anil D'Cruz, Director of Mumbai-based Tata Memorial Centre, said, "I have operated on a cancer patient as young as an 8-year-old boy. He was chewing tobacco from time when he was four."

"Tobacco consumption has begun in schools and so it is important that law is properly enforced and tobacco and cigarette vendors found violating the stipulated minimum distance rule should be removed," he said.

Dr D'Cruz said, "After increasing tax burden on cigarettes, its consumption has gone down. Tax serves as a major deterrent, and therefore, we hope the government will increase the tax on it."

Countries like France and South Africa have decreased tobacco consumption in one decade for which the US took four decades, just by increasing the taxation, the doctors said.

Source: NDTV

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Tuesday, 11 October 2016

Ban on sale of loose cigarettes comes into effect in Himachal

With an aim to dissuade youngsters from tobacco use and smoking, the ban on sale of loose cigarettes and beedis in Himachal Pradesh came into force from on Saturday.

'HP prohibition of sale of loose cigarettes/beedis and regulation of retail business of cigarettes and other tobacco products Bill 2016' was passed during the Monsoon session of the Assembly and has been notified after getting assent from Governor.

The Act provides for complete ban on sale of loose cigarettes and beedis and compulsory registration of dealers of tobacco products.

A provision for fine up to Rs 50,000 and jail up to three months for contravention of law in the first instance and fine up to Rs 1-lakh and jail up to one year for committing the offence the second time has been made in the act, aimed at reducing consumption of tobacco products.

No dealer would allowed retail business without registration from Registering authority and violation of the provision would attract fine up to Rs 10,000 for the first time and Rs 15,000 for subsequent offences.

Further, any police officer, not below the rank of Assistant Sub Inspector or any authorized officer of the state government, if he has reason to suspect that any provision of this Act has been, or is being, contravened, can enter and search any business premises or any other place where retail business of cigarettes or beedis or any other tobacco products is being carried or such products are stored. 

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Friday, 7 October 2016

MoEF issues notices to top gutkha, pan masala companies for use of plastic in sachets

The brand owners of the units manufacturing gutka, tobacco and pan masala shall have the overall responsibility for implementation of these directions.

Cracking down on 20 top gutka and pan masala companies for non-compliance of Supreme Court orders and Plastic Waste Management Rules, (PWM) 2016, the environment ministry has issued notices to them, directing them to prohibit use of plastic in packaging their products. The ministry's directions, reviewed by dna, has asked manufacturers of Gurkha, Tobacco and Pan Masala to immediately stop using plastic material in any form to follow strict compliance of Supreme Court's directions and provisions of PWM Rules. Under Rule 4(f) of the PWM Rules, 2016, plastic material is not to be used for sachets that store, pack and sell gutka, tobacco and pan masala.

"The brand owners of the units manufacturing gutka, tobacco and pan masala shall have the overall responsibility for implementation of these directions. The compliance report for the aforesaid directions and the provisions of the rules shall be submitted to the ministry within 30 days," the ministry's directions said. The union environment ministry can issue directions under section 5 of the Environment Protection Act, 1986, for closure. Prohibition or regulation of any industry, operation or process or for stoppage and regulation of the supply of electricity or water or any other service.

The ministry has issued these directions to top gutka, tobacco and Pan Masala manufacturing companies such as Vimal Pan Masala, Dharampal Satyapal Group, Rajshree Pan Masala, Manickchand Pan Masala, Pan Parag and Goa Pan Masala.

In a 2010 order, the Supreme Court had restrained manufacturers of gutka, tobacco and pan masala from using plastic material in sachets of gutka, tobacco and pan masala. These orders were not followed and later, in 2011, a contempt petition was filed regarding disobedience of Supreme Court's orders on use of plastic in gutka industry. The SC had then directed the environment ministry and other concerned agencies to ensure implementation of the its orders by all manufacturers across the country.

Source: DNA
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Monday, 3 October 2016

Government mulls new licensing policy for tobacco items

The government is considering a licensing policy for tobacco in a bid to control consumption and bring the largely unregulated business of products such as gutka and pan masala under some sort of government watch. 

The Department of Industrial Policy and Promotion (DIPP) has started internal discussions on the policy implication of licensing for the sector that has been mired in strong political interests. “We will speak to the stakeholders to seek their views and understand if some regulation can be brought for this sector,” said a senior government official, who did not wish to be identified. 

The deliberations follow sharp health and safety concerns raised by the health ministry over consumption of tobacco products and come ahead of the Conference of Parties (COP7) a global anti-tobacco conference to review the implementation of the World Health Organisation’s Framework Convention on Tobacco Control (FCTC) that is being held in India for the first time. 

Cigarettes, which account for just 11% of overall tobacco consumption in India, are subject to significant curbs and disclosures to discourage consumption. The balance 89% includes traditional products such as chewing tobacco, bidi, khaini and illegal cigarettes, the consumption of which goes on without any warning. 

“Organised players want some regulation in place...we are in favour of licensing but the condition of licensing should be practical and stakeholders should be consulted. Industry should be given time for implementation,” a Dharampal Satyapal group spokesperson said. The DS group is a leading players in tobacco products market. 

“It is important to regulate this sector to control excessive growth as there are health hazards. It will also help in improving the working conditions of of labour which includes women and children even,” said DK Srivastava, chief policy adviser, EY. 

No minimum support price has been declared for tobacco since 2008-09 in a bid to discourage production. Yet, in the past five years total tobacco production has grown at CAGR of 1.13%. 

ET View: Regulation a Must 
It makes sense to bring all tobacco products under a regulatory framework. Most of tobacco consumption takes place in the form of pan masala, gutka ets. Past efforts to regulate their sale have proven to be ineffective. Robust regulatory oversight would prove to be beneficial, given the health hazards posed by these products. It will also push the sector towards getting organised better. The government should not yield to pressure from tobacco lobby. 

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Wednesday, 21 September 2016

Cigarette packs sport 85 per cent health warnings, finds study

Signalling the effectiveness of enforcement drives by Police, Health and Excise departments, findings of an independent observational study reveal that leading cigarette companies have switched over to the display of the new 85 per cent pictorial graphic warnings. 

The study conducted in June 2016 – just two months after the date of implementation of 85 per cent pictorial warnings on 1 April 2016 – revealed that all cigarette packs were compliant with the three labelling requirements: minimum size, language, and visibility of health warnings.

Hundred cigarette packs from ten brands of two tobacco companies were observed during the week-long survey conducted under the coordination of Voluntary Health Association in India. Trained field agents observed tobacco vendors including kiosks, small grocery stores, and street vendors in both high and low-income regions of Thiruvananthapuram, as a part of the survey in eight states of India. 

A similar analysis of 100 bidi packets showed that none of them was compliant to graphic health warnings. A follow-up quick observation survey in early September showed that bidis manufactured by a cooperative sector company in Kerala are compliant to the new rules. 

Field agents reported non-availability of smokeless tobacco products though there are media reports of their easy clandestine availability, especially near educational institutions.

It was on 1 April 2016 that the Government of India mandated that tobacco product packs bear 85 per cent pictorial warnings including 60 per cent pictorial and 25 per cent text on the principal display area on front and back measuring 3.5 cm in width and 4 cm in height. Smoking forms of tobacco products have to display the warning, “Smoking causes throat cancer”.

The Union Health Ministry, had in May 2016, written to all states to ensure that tobacco products without the mandated warnings be withdrawn from the market latest by 31 May 2016 and that tobacco products be allowed for sales only after printing, pasting or affixing the new warnings. 

The State Police Chief Shri Loknath Behera had directed South and North Zone ADGPs, Range IGs and District Police Chiefs to take action including confiscation of tobacco product packs without the stipulated health warnings. 

Thanking the enforcement efforts, Dr Paul Sebastian, Director, Regional Cancer Centre and Chairman, Tobacco Free Kerala said, “As many as 40,000 lives are lost in Kerala every year due to tobacco use. Large-sized pictorial warnings on tobacco product packs are the easiest way of communicating tobacco harms among children and persons with low literacy. The key is to prevent tobacco use initiation,” he added while acknowledging the support of medical professionals, students, teachers, and the Kerala public in the campaign for large pictorial warnings. 
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Monday, 29 August 2016

Pawar urges people to stay away from tobacco

Recounting his battle against cancer, former Union agriculture minister Sharad Pawar appealed to the people to stay away from tobacco, one of the most common causes leading to oral cancer. Consumption of tobacco is an invitation to cancer, he said.

The NCP leader, who was diagnosed with mouth cancer a decade ago, while explaining his suffering for consuming tobacco, warned people about the repercussions of being addicted to tobacco. He was speaking at the inauguration of a cancer research centre in Jalna in Maharasthra on Sunday.

Narrating how he became addicted to tobacco, Pawar said that one day he had been invited at a field for lunch. "After the lunch I was pestered to have 'paan' stuffed with tobacco, which ultimately made me a tobacco addict," he said.

At one time the condition was painful as the skin inside my mouth was burnt, making it difficult to consume food, Pawar said.

BJP state president Raosaheb Danve, Jalna district guardian minister Babanrao Lonikar, cancer specialist Sanjay Rakh, former minister Rajesh Tope, district collector Shivaji Solunke and zilla parishad CEO Deepak Chaudhary were also present on the occasion.

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Wednesday, 24 August 2016

GST regime should tax cigarettes more


An ideal standard rate for the Goods and Services Tax (GST) is still being hotly debated in policy circles. However, it is important to know whether this standard rate will be applied to all goods and services, including demerit goods such as cigarettes.

The economic costs attributed to tobacco related diseases amounted to ₹1,045 billion in 2011, according to a report by the ministry of health. Nearly a million deaths per year are also attributed to tobacco use in India.

Deceptively high rate
The committee on possible tax rates under GST headed by the Chief Economic Advisor Arvind Subramanian had proposed a structure of rates under GST in its report in December 2015. It suggested a standard GST rate for most goods and services (16.9-18.9 per cent), a low rate (12 per cent) for certain necessary commodities, and a higher rate (40 per cent) for sin/demerit products.

While there is enough consensus that demerit goods like cigarettes need to be taxed high, there is hardly any consensus on how high that should be.

In order to understand this, it is important to demystify a seemingly high demerit rate of 40 per cent. The proposed 40 per cent is a statutory rate which is calculated before this rate is included in the final retail price.

Once applied, and calculated as a percentage of final retail price, the inclusive rate becomes only 28.6 per cent, that is, a seemingly high rate of 40 per cent GST is merely a 28.6 per cent inclusive rate or tax burden.

Article 6 of the World Health Organization (WHO) Framework Convention of Tobacco Control, which 180 countries have ratified, including India, recommends parties to implement “tax policies and, where appropriate, price policies, on tobacco products so as to contribute to the health objectives aimed at reducing tobacco consumption”. It thereby, acknowledges that tobacco taxes are an effective instrument to reduce tobacco use.

The WHO technical manual on tobacco tax administration recommends that tobacco excise taxes account for at least 70 per cent of the retail price. It is clear that the proposed 40 per cent GST is not even near half that rate.

Revenue loss
India, currently has a complex system of indirect taxation on cigarettes. The excise tax on cigarettes is applied based on the length of cigarettes as well as the presence of a filter tip, leading to six excise tax slabs at present.

In FY 2015-16 the average excise from all slabs was ₹22.9 per pack of 10 cigarettes. The statutory VAT rates on sales, on the other hand, varies from a low of 13.5 per cent in Assam to 45 per cent in States like UP and Rajasthan with the average rate being approximately 30 per cent, which translates to an inclusive rate of 23.1 per cent.

The average retail price of a pack of 10 cigarettes in the year 2016 is ₹70.6 according to data from Euromonitor. Hence, the excise burden is approximately 32.3 per cent and the total tax burden is 55.4 per cent in the FY 2015-16.

Cigarettes being a highly demerit product, it is important that its post-GST tax burden remains at least as much as it is today, if not more. If GST were to be implemented today at a rate of 40 per cent for cigarettes, there needs to be at least an additional ₹1902 of excise tax per 1,000 sticks in order to maintain the current tax burden and tax revenue from cigarettes intact.

The calculation is simple: 88.1 billion cigarettes were sold in 2015, with an average retail prices of ₹ 70.6 per pack and a total tax burden of 55.4 per cent, generating a total excise tax revenue of ₹ 202 billion and VAT revenue of ₹144 billion, totalling ₹346 billion in FY 2015-16.

If the GST is 40 per cent, for the same final retail price and quantity of consumption, it would generate a GST revenue of ₹178.6 billion requiring an additional excise of ₹1902 per 1,000 sticks to maintain the total tax revenue intact. Given that there is annual inflation, and the GST is expected to be rolled out only by the FY 2017-18, the required excise taxes to maintain an inflation adjusted revenue from the current levels, would be ₹2,257 per 1,000 sticks on top of a 40 per cent GST. This would only replace the current tax burden of 55 per cent.

Simplify taxes
Tax rates on cigarettes shouldn’t be any lower than this when the GST is rolled out. Else, it poses huge risks to public health while digging a hole on the tax revenue from cigarettes which contributes more than 80 per cent of the excise revenue from all tobacco in India.

Since GST is an opportunity to overhaul the indirect tax system, it is also important to use this opportunity to eliminate the different slabs and impose a uniform specific excise tax rate on all cigarettes, regardless of their length or other characteristics. This is because, previous experience shows this complex tax structure works to the advantage of cigarette manufactures by facilitating legal manipulation of the system while preserving their customer base in the event of a tax increase.

When the GST Council meets to recommend a rate its overwhelming objective may be to find a revenue neutral rate that is applied to all goods and services, without compromising the fiscal position of either the central or the State governments. Hence, it is important to keep in mind that cigarettes being a major source of indirect tax revenue, a high demerit GST rate coupled with a uniform excise higher than the existing average excise rates should be applied to cigarettes. This will ease the pressure on the standard GST rate that may be applied to essential goods and services, besides actively discouraging cigarette consumption.

The writer is an assistant professor of economics, IIT-Jodhpur

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Friday, 19 August 2016

Michael R. Bloomberg Becomes WHO Global Ambassador for Noncommunicable Diseases

The World Health Organisation has today named Mr Michael R. Bloomberg, philanthropist and former three-term Mayor of the City of New York, as Global Ambassador for Noncommunicable Diseases (NCDs).

NCDs (including heart disease, stroke, cancer, diabetes and chronic respiratory diseases) and injuries are responsible for 43 million deaths each year - almost 80% of all deaths worldwide. Each year, 16 million people die from NCDs before the age of 70. Road traffic crashes account for a further 1.25 million deaths each year and are the leading cause of death among young people, aged 15–29 years. The premature death and disability from NCDs and injury can largely be prevented, through implementing proven, cost effective measures.

For the past decade, Bloomberg has been working with WHO on tobacco control and injury prevention. “Michael Bloomberg is a valued partner and has a long track record of supporting WHO in the areas of tobacco control, improving data for health, road safety and drowning prevention,” said Dr Margaret Chan, WHO Director-General. “I am therefore absolutely delighted to be able to appoint him as Global Ambassador for Noncommunicable Diseases. This will enable us to strengthen our response together to the major public health challenges of NCDs and injuries.”

In his new role, Mr Bloomberg will work with national and local political leaders around the globe to highlight the burden of NCDs and injuries. His track record on public health achievements as mayor will enable him to motivate cities to take on the global agenda for NCD and injury prevention. He will help mobilize national and city level political leaders, donors and the private sector to prevent and treat the NCD epidemic and combat injuries.

Through this work, Mr Bloomberg and WHO will be supporting the attainment of the United Nations’ Sustainable Development Goals (SDGs). World leaders have recognized NCDs and injuries as urgent priorities for action in the SDGs. The SDGs contain a number of specific targets for NCDs and injuries, including halving the number of global deaths and injuries from road traffic accidents by 2020, reducing by one-third premature mortality from noncommunicable diseases by 2030, and strengthening implementation of the World Health Organization Framework Convention on Tobacco Control.

“I am honored to become WHO Global Ambassador for Noncommunicable Diseases and excited about the possibilities that are within our reach. Cities and countries around the world are making great progress reducing preventable, premature deaths, and by replicating the most effective measures on a global scale, we can save many millions of lives,” said Michael Bloomberg. “Together with WHO, we’ll support low- and middle-income countries as they work to achieve their policy goals and direct resources in ways that will best improve public health. We’ll also work to raise awareness among leaders and policy makers at the local level about the real gains that can be achieved when effective programs are in place.”

Mr. Bloomberg’s role and activities will extend the reach of WHO’s work to reduce exposure to the main NCD risk factors: tobacco use, unhealthy diet, physical inactivity and the harmful use of alcohol, as well as to promote proven measures to reduce injuries from road traffic crashes, burns, falls and drowning. This includes efforts to strengthen health systems’ response to manage NCDs and injuries, and to improve availability of health data to inform policy and programmes.

Effective strategies to prevent NCDs include increasing the tax and price of tobacco and alcohol, enforcing smoke-free environments, implementing large graphic tobacco health warnings, enforcing bans in tobacco advertisement, promotion and sponsorships, promoting the availability of healthy, affordable diets, and discouraging the consumption of foods and beverages high in sugars, salt and fat. Proven actions to prevent the most common forms of injuries include enforcing speed limits, drink-driving legislation and the wearing of seat-belts and helmets, enforcing laws on smoke alarms and hot water tap temperatures, removing or covering water hazards and fencing pools to prevent drowning, eliminating fall hazards and improving balance among the elderly. These are all strategies where both national and local government officials can play a role.

The position of WHO Global Ambassador is for an initial period of two years and is on a purely honorary basis. It does not carry any right to remuneration or compensation for expenses.

As a philanthropist, Michael R. Bloomberg has given more than $4.3 billion in support of education, the environment, government innovation, the arts, and public health. His philanthropic investments in public health include a $100 million commitment to eradicate polio, a $600 million initiative to reduce global tobacco use, and programs to tackle obesity, road safety, maternal health, and drowning.

Source: WHO
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