India: Rajasthan, J&K Raise Tax on Tobacco Items

Source from:  The Asian Age 03/07/2013

Both Rajasthan and Jammu and Kashmir have set new standards in using taxation for tobacco control. Steadfast in its commitment to protect its citizens from the growing menace of tobacco products, the government of Rajasthan on Wednesday announced an increase in value added tax (VAT) from 50 per cent to 65 per cent on all tobacco products in the Budget of 2013-14. The government of Jammu & Kashmir too announced an increase in value added tax (VAT) from 30 per cent to 40 per cent on all tobacco products.
 
The government raised the rates from 40 per cent to 50 per cent last year in Rajasthan and from 25 per cent to 30 per cent and these were the highest in the country. The step gains significance as according to the Global Adult Tobacco Survey (GATS) India 2009-10 released by ministry of health and family welfare (MoHFW), 32.3 per cent population of Rajasthan use tobacco product in one or the other of its form. Rajasthan has 2.8 per cent cigarette smokers, 16 per cent bidi smokers and 19 per cent use smokeless tobacco. On the other hand 26.6 per cent population of Jammu and Kashmir is using tobacco product in one or the other of its form. Jammu and Kashmir has 12 per cent cigarette smokers, 3.8 per cent bidi smokers and 8 per cent use smokeless tobacco.

However, in Rajasthan, consumption of cigarettes, bidi and zarda (chewing tobacco) declined drastically in the last three years after the state government increased tax rate on tobacco products from 20 per cent to 50 per cent. While in terms of value, cigarette value was `413.55 crores in 2010-11, it came down to `349.67 crores in the following year while in the first six months of current financial year the total sale of cigarettes was just `160.28 crores. Enditem