Wednesday, 24 August 2016

GST regime should tax cigarettes more

RIJO M JOHN

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
Image: 
http://www1.nyc.gov/office-of-the-mayor/archive/bio.page
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Saturday, 13 August 2016

Scheme to help farmers shift from tobacco extended to 10 states

Crop diversification programme has been extended to 10 states to encourage tobacco growing farmers to shift to alternative crops, the Lok Sabha was informed today. 

Production of flue cured virginia (FCV) tobacco, used for manufacturing of cigarettes, has been going down in the past few years and stood at 52.29 million kgs approximately in 2015-16. 

Health Minister JP Nadda, in written reply to a question, said that as per the information received from Tobacco Board, Department of Commerce, FCV tobacco production stood at 60.97 million kgs in 2013-14, 57.60 million kgs in 2014-15 and 52.29 million kgs in 2015-16. 

He said the government has issued regulations under the Food Safety and Standards Act, 2006, which lay down that tobacco or nicotine cannot be used as ingredients in food products. 

"As per the information received from the department of agriculture, cooperation and farmers welfare, the Ministry of Agriculture, crop diversification programme, an ongoing sub-scheme of Rashtriya Krishi Vikas Yojna has been extended to 10 tobacco growing states with effect from 2015-16 to encourage tobacco growing farmers to shift to alternative crops or cropping systems," Nadda said. 

He said allocations of Rs 2,500 lakh and Rs 3,000 lakh as central share have been made during 2015-16 and 2016-17, respectively, to diversify tobacco farming in Andhra Pradesh, Bihar, Gujarat, Karnataka, Maharashtra, Odisha, Tamil Nadu, Telangana, Uttar Pradesh and West Bengal. 


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Saturday, 30 July 2016

India to host international summit on tobacco-control

India will host a crucial global summit in November to eliminate the illicit trade of tobacco products in which delegates from 180 countries will take part. 

"India is hosting the 7th session of the Conference of the Parties (COP7) to the WHO Framework Convention on Tobacco Control (WHO-FCTC)," Minister of State for Health Anupriya Patel said in a written reply to a question in the Lok Sabha.

She said the summit scheduled from November 7-12 at the Indian Exposition Mart in Noida will aim "to eliminate illicit trade of tobacco products." 

About 1,000-1,500 delegates from 180 countries along with observers in official relations with the WHO FCTC are expected to participate in the summit, Patel said. 

"India has ratified FCTC in 2004 and is a party to it." 

Patel, however, said that no decision has been taken yet on the composition of the Indian delegation for the event. 

Replying to another question, she said according to the Indian Council of Medical Research - National Cancer Registry data, the estimated number of cancer cases in the country stood at 14.5 lakh in 2016. 

Based on this report, the percentage of tobacco-related cancers is 43.8 among males, 16.0 among females and 30.1 of the population as a whole, she said. 

Patel said generating awareness on harmful effects of tobacco use is the key national and state-level activity under the National Tobacco Control Programme.


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Saturday, 23 July 2016

Teens switching to bidis: Report

Nineteen per cent boys and eight per cent girls in the age group of 13-15 have used tobacco products in recent months, mostly in the form of non-commercially produced cigarettes such as bidis, hand-rolled cigarettes made of unprocessed tobacco wrapped in leaves, said a report.

According to the report by the Population Reference Bureau, the usage of such products has prevailed because they are relatively affordable, poorly regulated and easily obtained from street vendors and kiosks.

"Smokeless tobacco products and snuff are commonly used in some places are used more than cigarettes.The rising popularity of e-cigarettes is another concern, as these do not produce tobacco smoke but may still contain nicotine and other harmful substances. These devices are marketed to youth and are easily available online," said the report.

"Myriad varieties in which tobacco is available in Asia, makes tobacco a very versatile product for adolescent and young people. Easy access to unregulated products like e-cigarettes and hukkah further exacerbates their vulnerability, said Monika Arora, Director, Health Promotion Division and Associate Professor, Public Health Foundation of India (PHFI).

According to Arora, India needs to step up enforcement of tobacco control policies to provide full protection to young people and introduce innovative prevention and cessation solutions to meet one of the NCD targets of 30 per cent reduction in tobacco use prevalence by 2025 that the country has adopted.

The report named "Addressing Non Communicable Disease Risk Factors Among Young People: Asia's Window of Opportunity to Curb a Growing Epidemic" also poured light on the four main Non Communicable Diseases- cardiovascular diseases (CVDs), chronic respiratory diseases, diabetes, and cancers -- are caused primarily by exposure to tobacco, harmful use of alcohol, unhealthy diet, and too little exercise.

These behaviours often begin in adolescence or young adulthood and set the stage for NCDs later in life.

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Saturday, 9 July 2016

Pictorial warnings more effective, says study

A study published in a medical journal finds that pictorial warnings are more effective than text-only messages in tobacco products. The study, which had more than 2,000 respondents, was done to gauge the perceived effectiveness of text and pictorial health warnings for smokeless tobacco packages and was conducted in Navi Mumbai and Dhaka.

The experimental study by Tobacco Control, an international peer-reviewed journal for health professionals and others, involved adult smokeless tobacco users aged over 19 and non-users. During the study, the respondents viewed warnings depicting five health effects in text-only, symbolic pictorial, graphical pictorial and personal testimonials formats.

"We have found that text-only warning were perceived as less effective than the pictorial styles. Graphic warnings were given higher effectiveness ratings than symbolic or testimonial warnings," said PC Gupta, Healis-Sekhsaria Institute for Public Health, one of the co-authors.

Interestingly, WHO has been advocating countries to adopt plain packaging with pictorial warnings to reduce tobacco consumption across the world. It had taken it up as a theme for 'World No Tobacco Day'.

This idea was successfully implemented by Australia in 2012 and, according to WHO, it has shown positive results. Presently, in India, pictorial warning is compulsory on 85% of the packet.

"Tobacco is the only consumer product that has no good use whatsoever apart of killing every third consumer. Tobacco is attributable cause of 50% cancers in India and majority of lung or heart diseases. Pictorial warnings is very effective and plain packaging is the need of the hour," said Dr Pankaj Chaturvedi, professor, head and neck surgeon, Tata Memorial Hospital.

According to WHO, the plain packaging is an important demand reduction measure that lessens the attractiveness of tobacco products, restricts the use of packaging as a form of tobacco advertising and promotion, limits misleading packaging and labelling, and increases the effectiveness of health warnings.

India is ranked at 136 among 198 countries in terms of prominence of pictorial health warnings on tobacco packaging and is ranked much below countries like Pakistan, Bangladesh, Nepal, Thailand etc., having higher proportion of pack warnings on the principal display areas of the tobacco packs.

Health experts also say that apart from emphasising on plain packaging with pictorial warnings on tobacco products, there should also be a robust tobacco cessation programmes. "90% of the people are aware that tobacco is harmful but they do not know how to quit it. We need a robust tobacco cessation programs in our government hospitals. In abroad, many countries like South Korea and Japan have started tobacco cessation programs to help their citizens quit tobacco," said Dr Lancelot Pinto, consultant respirologist at Hinduja Hospital.

What is plain packaging?
A generic, standardised or homogeneous packaging, refers to packaging that requires the removal of all branding (colour, imagery, corporate logo and trademarks). Permitting manufacturers to print only the brand name in a mandated size, font and place on the pack, in addition to the health warnings and any other legally mandated information such as toxic constituents and tax-paid stamp.

Source: DNA
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Friday, 24 June 2016

Smoking May Have Negative Effects On Sperm Quality: Study

Men, take note! Cigarette smoking may significantly damage the DNA of your sperm and affect fertility as compared to non-smokers, a new study has warned.

Researchers also assessed 422 proteins in participants' sperm. One protein was absent, 27 proteins were under-represented, and 6 proteins were over-represented in smokers.

Analyses of these proteins suggest that cigarette smoking may promote an inflammatory response in the male reproductive tract.

The study published in the journal BJU International included 20 non-smoking men and 20 men who smoked.

"More and more studies are demonstrating a harmful effect of smoking on male fertility," said Dr Ricardo Pimenta Bertolla, senior author of the study.

"Our results point in the direction of important semen alterations: semen of smokers presents an inflammatory nature, associated with decreased capacity of sperm to achieve fertilisation and generate a healthy pregnancy," said Mr Bertolla.

"It is especially noteworthy that, in our study, sperm DNA fragmentation was increased. Other studies have proposed this to be a potentially promutagenic effect, which is to say that sperm with altered DNA may lead to health problems in the offspring," Mr Bertolla said.

Source: NDTV

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Tuesday, 14 June 2016

From a smoker to a smokeless tobacco user: Study

Even as the state and the country is preparing for the next round of the Global Adult Tobacco Survey (GATS), a recent study based on the current edition of this globally followed survey has found that switching to equally harmful smokeless tobacco use is the most common smoking cessation method.

The study by Achutha Menon Centre for Health Science Studies of Sree Chitra Tirunal Institute for Medical Sciences and Technology, Trivandrum shows that more than a third of the former smokers in India reported switching to smokeless tobacco for quitting smoking. The study has been published in a recent edition of the international peer-reviewed journal ‘Public Health’.

GATS 2009-10 posed a question to all 2035 successful quitters on the method they used for cessation. Among the options given to the respondents were smoking cessation clinic; nicotine replacement therapy; a quit line or a smoking telephone support line; and switching to smokeless tobacco. The majority 44.4 per cent of total successful quitters including 50.8 per cent men and 8.7 women reported switching to smokeless tobacco use. 

The GATS was conducted covering all the 29 states and two union territories in the country. This nationally representative household survey covered 69,296 individuals aged 15 years and above using a standardised methodology.

Highlighting the policy implications, Dr KR Thankappan, Prof and Head, Achutha Menon Centre and principal researcher of the study said, “Switching to smokeless tobacco is not a safer option as it is equally harmful as smoking. Coordinated measures including high levels of taxation on all tobacco products, strict enforcement of 85 per cent graphic warnings, and concerted awareness generation on harms of smokeless tobacco products is very important.”

Specifically for Kerala, he called for strict enforcement of the ban on pan masala and gutkha containing tobacco or nicotine, steps to combat smuggling of these products and targeted awareness building for the migrant population who are among the prime users of smokeless tobacco products.

Senior Project Fellow, Achutha Menon Centre and co-author of the study Dr GK Mini said, “Across the country, smokeless tobacco use surpasses smoking. If switching over is also added, the disease burden from smokeless tobacco use will be compounded. Studies have shown that smokeless tobacco users have a more than three-fold higher risk for cancer.”

As per GATS 2009-10, the number of adult current users of smokeless tobacco in India is 206.0 million, much higher than the number of current tobacco smokers of 111.2 million.

GATS is conducted once in five years; the next round is slated for 2016-17. In India, it is conducted under the coordination of the Union Ministry of Health & Family Welfare with technical assistance from the World Health Organisation.
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Wednesday, 1 June 2016

Government for stringent action against substances harming humans: Kerala Health Minister

The Government will take strong action against substances such as tobacco, alcohol or other drugs that cause harm to the human body. Concerted action will be taken up against tobacco and drug use, said Hon’ble Minister for Health and Family Welfare Smt KK Shyalaja while inaugurating the World No Tobacco Day observance event here today.

The Health Minister, formerly a teacher, expressed concerns over the increasing availability of pan masala and other drugs in the form of candies near educational institutions. She called upon all enforcement agencies to identify the availability of these products and initiate stringent action.

In his presidential address, Hon’ble Minister for Electricity & Devaswom Shri Kadakampally Surendran said that schools and colleges are continuing to be centres of easy availability of pan masala, tobacco products and other drugs. “Continued efforts are needed with the support of civil society to achieve success in reining tobacco use in our state,” he added.

Director, Subhodham, Government of Kerala Dr K Ambady who delivered the keynote address said that collective and coordinated action that hinges on a three-pronged approach including supply, demand and harm reduction strategies are required for bringing down use of tobacco, alcohol and other drugs.

Dr Paul Sebastian, Director, Regional Cancer Centre (RCC), while delivering the welcome address said there is a need for generating awareness against tobacco harms in youngsters between the ages of 10 and 20 years. “Youngsters should be made ambassadors for propagating tobacco harms leading to the creation of a tobacco free society,” he added.

The Health Minister also gave away the media award for best article on cancer instituted to Regional Cancer Association (RCA) to Shri Santhosh Sisupalan, Senior Sub Editor, ‘Manorama Arogyam’. TKM Arts and Science College, Kollam won the award for the best cancer detection camp held in association with NSS volunteers.

Dr R Ramesh, Director of Health Services (DHS); Dr KR Thankappan, Prof and Head, Achutha Menon Centre for Health Science Studies of SCTIMST; Shri Johnson J Edayaranmula, Director, ADIC-India and Hon.Advisor, Subhodham and Dr Babu Mathew, Hon.Secretary, RCA also spoke in the inaugural session.

The importance of advocacy for tobacco control came to the fore as Dr Babu Mathew spoke on the topic "Battle against tobacco - the RCC experience”. Dr KR Thankappan while speaking on the “Relevance of tobacco cessation programmes in India” said both prevention and control are needed to address tobacco, a silent killer.

Dr. AS Pradeep Kumar, Former Addl.DHS & Senior Research Officer, Achutha Menon Centre for Health Sciences Studies apprised participants on “Legal aspects of tobacco control” by highlighting various sections of Indian tobacco control law COTPA, 2003.

A panel discussion on the topic “Towards Tobacco Free Educational Institutions in Kerala – Experiences, Challenges & Plans Ahead” and ensuing discussions witnessed thoughts on the need for self-control, role of students and peers in curbing tobacco use in schools, counseling students with love and care and migrants as suppliers of these products.

Dr Bipin Gopal, Assistant Director of Health Services and State Nodal Officer, NTCP and NCD; Dr Binoy S Babu, Junior Administrative Officer, DHS; Smt Anila George, Joint Director (Academic), DPI; Shri Saju Itty, Executive Director, Kerala Voluntary Health Services and Shri S Jayaraj, State Coordinator, Tobacco Free Kerala spoke. Shri Surendran Chunakara, PRO, RCC moderated the discussion.

Dr R Jayakrishnan, RCC made the closing remarks in the function in which School Health Nurses, Student Police Cadets, NCC cadets and NSS volunteers were present. 
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