GST regime has ushered in reduced tobacco consumption in Australia

In line with Kerala’s demand for a higher tax burden on tobacco, an analysis of taxation structures in Australia – a world leader in tobacco control – shows that a combination of GST and central specific excise duty has resulted in reduced consumption of tobacco in the country. 

This combination has been a critical reason for Australia’s success at decreasing the prevalence of tobacco use over the past decade. Available data shows that the country has been able to reduce tobacco prevalence by 25 per cent since 2003, to only 15.8 per cent of adults in 2015 – owing to a judicious mix of tobacco control measures including GST and central specific excise and customs duty, adjusted to meet inflation levels.

GST on tobacco came into force in Australia at the rate of 10 per cent on July 1, 2000. The estimated consumption of tobacco products including cigarettes, cigars, and contraband cigarettes fell from 28,607 million in the year 2000-01 to 24,725 million in 2010-11. 

Between 1999 and 2010, there was no increase in either tobacco central specific excise or customs duty on tobacco products apart from adjustments for consumer price index (CPI). The specific central excise on tobacco products was significantly increased in 2010, with further increases in recent years, on top of annual adjustments for inflation. 

Today, the central excise on cigarettes, cigars, and pipe tobacco has more than doubled its value in 2003, and central excise represents as much as 66 per cent of the retail price of economy brands of cigarettes. Combined with the GST, the tax burden on cigarettes is close to World Health Organisation (WHO) standards.

Estimations of revenue from GST also show a more than 56 per cent increase from 783.27 million dollars in 2001 to 1,225.36 million dollars in 2011.Total estimated revenue from excise, customs duties and GST on tobacco products revealed a 50.8 per cent increase during the same period (from 5,797.21 million dollars in 2001 to 8,742.74 in 2011).

The Australian experience demonstrates that the most direct and effective method for reducing tobacco consumption is to increase the price of tobacco products through tax increases. Higher taxes are particularly effective in reducing tobacco use among vulnerable population groups, such as the youth, pregnant women, and low-income smokers.  

The WHO has applauded and acknowledged Australia as a global leader in tobacco control. In 2011, Australia became the first country to pass legislation requiring all tobacco products to be sold in plain packaging. This legislation has brought down tobacco consumption by a staggering 19.6 per cent in just almost three years, per a 2015 news report. 

Read more ...

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.”  

Read more ...

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

Read more ...