Higher Tobacco Tax Saves Lives

Source from:  DNA 03/22/2013

High hopes are pegged on the state to increase taxes on tobacco in the upcoming state budget on Wednesday, after researchers estimated that lakhs of deaths due to tobacco consumption could be averted if taxes are raised.

According to latest 2012 - 13 estimates by John Hopkins School of Public Health, USA nearly thirty lakh lives can be saved annually in Maharashtra alone, if Value Added Tax (VAT) on tobacco and related products is increased to 100 percent. Further, the research report indicates that if the VAT is increased to 50% of the sale price of a tobacco product, it could save more than eleven lakh lives.

Researchers have estimated this by estimating as to how many users will quit using tobacco if prices rise substantially. "Latest estimates drawn based on census data and global adult tobacco survey indicate that as many as 70% users in the state will quit if there is a massive increase in prices as the affordability will then go down," said said Dr PC Gupta, director, Healis Sekhsaria Institute of Public Health.

VAT in case of tobacco and related products is levied by every state government on the retail price of tobacco packets, beedis and cigarettes. "While one packet of beedi containing twenty pieces or a pouch of tobacco costs as less as Rs 5. At the moment the state levies a bare 5% of VAT. This is hardly a deterrent for an addict as the price of the packet does not increase at the buyer's level. The addict will continue to buy beedis or tobacco. If the VAT is raised by 100 percent, then the costs will rise to Rs 10 per packet. Also, VAT on cigarettes and tobacco packets is only 20%. This is very less," explained Dr Gupta.

Public health activists have written to state's deputy chief minister Ajit Pawar urging him to increase VAT up to 60% to 65% on all tobacco products based on the estimates that higher taxes end up saving lives. World Health Organization recommends that 65% - 70% of the retail price of tobacco products should be taxed.

Of more than eleven crore population in Maharashtra, a chunky 31.4 percent are addicted to tobacco. Close to 2.3 crore persons use smokeless tobacco and 1.04 crore persons of all addicts will die a premature and an untimely death due to a host of ailments including oral and lung cancers or heart attacks. "If the state increases taxes substantially, it will deter the persons from buying tobacco and related products. This will save lakhs of lives. Also the youngsters who pick up the habit early will be deterred and a new generation of potential addicts will be nipped in the bud," said Padmini Somani, director, Salaam Bombay Foundation.

World Health Organization recommends that 65% - 70% of the retail price of tobacco products should be taxed

Researchers estimate that more than 11 lakh lives in Rajasthan have been saved in 2011 - 12 after Rajasthan increased VAT on all products to 50%

Rajasthan state government has further hiked Value Added Tax (VAT) on cigarettes, beedis and tobacco products up to 65% in 2013 state budget announcement to match WHO standard. Enditem