Public health groups along with doctors and economists have urged the Group of Ministers (GoM) in the GST Council to increase the cess on tobacco products for raising the disaster remediation revenue.
Appreciating the leadership and vision of the GST Council to help Kerala raise funds for rehabilitation of its people affected by the recent floods, the group is suggesting, raising cess on tobacco products to address the crisis facing the citizens of Kerala.
The World Health Organisation (WHO) recommends that the countries should impose tobacco excise taxes that amount to at least 75 per cent or more of retail price to achieve the dual objective of reducing tobacco use and increasing government revenue. The tax burden on bidis post-GST is only 22 per cent compared to 53 per cent for cigarettes and about 60 per cent for smokeless tobacco.
The overall tax rate on all tobacco products in India is still low very and the GST has made no significant increase in the tax burden of tobacco products, especially cigarettes and has in fact made all products more affordable.
According to Health Policy Analyst Dr Rijo John, “Compensation cess constitutes more than two thirds of the total tax revenue from cigarettes.
As these cesses were not revised for more than a year, cigarettes have become much more affordable compared to the time GST was implemented and it warrants significant upward revision of cess rates applied on cigarettes.”