Ahead of next month’s annual Budget for 2014-15, Health Minister Harsh Vardhan has written to Finance Minister Arun Jaitley to hike taxes on cigarettes and increase the price of each stick by Rs3.5 irrespective of its length. Vardhan has also urged the Finance Ministry to scrap the tax exemption on bidis.
If the proposed levy is implemented, the consumer will have to shell out Rs35 extra for a packet of ten cigarettes.In his letter, Harsh Vardhan said: “I propose a large but feasible tax hike of Rs3.5 per cigarette stick in the 2014 Budget. The tax would be applied to all lengths to prevent the industry (tobacco) from shifting production and marketing to lower length cigarettes, as has been the past practice.”
If his proposals are implemented, Vardhan told Jaitley, it would lead to over three million smokers quitting and three million potential smokers not taking up smoking at all. The new tax would also bring about Rs3,800-crore in revenue.While the hike in cigarette price would be borne mostly by the upper income class, the reduction in mortality would benefit the low-income population, he explained.
Urging the Finance Ministry to scrap the tax exemption on bidis, he said that the exemption given to manufactures producing less than 20 lakh bidis be taken back and a redefinition of taxation policy should be formulated to avoid tax evasions.